Fisher & Paykel Healthcare Corporation Limited (FPH) Earnings Call Transcript & Summary

[Foreign Language] Good morning, and welcome to our Fisher & Paykel Healthcare Investor Day. I'm Fiona Cresswell, and I'm in the marketing team here at Fisher & Paykel Healthcare, and I've been in the business for just over 20 years.

And I'm Harris Ang. Not as long as you, Fiona, just under a decade. I started as a grad, and now I'm a process development engineer working with a 950 production line, which produces neonatal circuits for hospitals.

Harris, look at you, saving the baby.

We try our best.

So today, we are showcasing our relentless innovation at Fisher & Paykel Healthcare. And to do that, we have an incredible lineup of live presentations, video footage and interviews for you. Harris and I are here to facilitate your day. We're going to let you know what's coming up next and also when you can take a break.

And since you're joining us from behind the screens today, we're going to do our best to recreate the experience that our on-site audience are having as much as possible. So that means you'll be fed through to the live presentations when they're happening. But when the on-site audience is having a walk around or a show and tell, we too have also created that experience through prerecorded content.

We're going to give you a 45-minute break around midday just for your lunch. And at that time, our live audience here are going to do a site tour through our new Daniell building. But don't worry because we didn't want you guys to miss out. So we got hold of Jonti, our VP of Supply Tech Facilities and Sustainability yesterday, and we had him give us the tour just for you guys. We recorded that. And throughout the day, while there's segments of the live activity, which we need to fill as they're walking around, we're going to play some of that footage for you. And then you'll get to see the truly magnificent campus that we have here.

Now we are here to communicate the day, not to answer any questions, but there will be a Q&A time, which we will prepare you later in the program. And it looks like they're about ready for us in the live room. So let's cut over to them, and we'll see you guys in a bit.

Good morning, everyone. Welcome to Fisher & Paykel's Health's Investor Day for 2022. My name is Andy Niccol. I'm the General Manager in charge of Respiratory Humidification. With me today is Vandna Patel. She's one of our very talented product development engineers, and we're going to be your MC's for today.

Hey, everyone. It's great to have the investors community back on site for our first in-person Investor Day since 2018. And also hello to all the online investors remotely. I hope you're wearing your comfiest sweatsuit because we've got a packed day focusing on the latest healthcare innovations.

Yes. It's a really interesting concept there, actually. It makes up a huge part of our culture. We're never satisfied with what we've already got. You can see that coming through with our products and the innovations over the years. You can see that with even the way we do our Investor Days, Hayden and Marcus and Tessa, how they've evolved those over the years. Hopefully, you've experienced that as well.

Yes, I know what drew me to this company as a young engineer, was it strive for care by design. As engineers in the medical device industry, we are focused on innovation led by empathy. And the products that we use -- products that we make, sorry, are used by people like us. And as the world constantly evolves and changes, we do, too.

Yes, absolutely. You would have even seen that relentless drive for innovation coming through with our buildings. This is our newest building. It's called the Daniell building. It opened, actually, while we moved in, in sort of the middle of the first lockdown, opened officially about July. You'll get an opportunity to have a bit of a site tour during lunch. I definitely recommend taking up that opportunity. We'll be able to point out some of the things that are different about this building, some of the things that really make us very unique and encompass our culture for sure.

Yes. And when you probably arrived on site this morning, you probably noticed that you can access the building by the main gate, and that's due to the construction of our next building, building 5 by over there.

Yes. Sorry about that. It's a bit hard to find. It makes things a little bit tricky. Again, maybe before we talk about the agenda, we should probably cover off some of the obligatory housekeeping things. So in the unlikely event of an emergency, and the emergency exit is actually in the back corner over there. You go out those stairs, down the driveway and our assembly point is in the far car park just behind us.

Cool. And if you need it [indiscernible], you need to use bathrooms at any time, they're located right outside the foyer directly on the left.

Yes. The entire site is smoke-free, so that's not just the buildings. It's actually anywhere on the tour, and your car's on the site. The whole thing's smoke free, so please refrain from smoking.

Cool. and If you have any general questions or queries, there's a help desk right over there, is here to help that can help you with all your problems.

Yes. You probably see us running around as well. Feel free to ask any questions as we go. Okay. The agenda for today, yes, we're going to start by hearing from Lewis Gradon, our CEO and Managing Director; and Lyndal York, our CFO. They're going to talk about the aspirations for the company. And you're going to hear from Andrew Somervell, our VP of Products and Technology. He's going to give some insights into how we do R&D. Then we're going to get a brief introduction from Winston Fong, our VP of Surgical Technologies; and Chris Crone, our General Manager of Airvo Optiflow, and they're going to be talking about some of the breakout sessions that are coming up after the presentations.

Cool. And then we'll be heading off into our first rotation. You'll either be exploring Airvo 3 or anesthesia in surgical. And don't worry, you'll get to do both. And there's plenty of opportunity to ask questions and stuff.

Yes, there'll be an opportunity to swap over as well. So once we've done that first rotation, we'll come back here. It will be a bit of lunch. We'll start some of the site tour is about quarter past 12. They'll be leaving -- there's 4 tours us in total, leaving about every 5 minutes thereafter. Don't worry, one of us will probably be on the mic telling you when they're leaving. Yes.

Cool. And then after that, we'll be back here around 2 for a second round -- sorry, we'll finish our second rotation, we'll be back here around 2 with a fun Q&A panel with all the speakers from today.

Yes, perfect. Without further ado, Lewis and Lyndal.

Before I came up here, I did tell them that their primary task was not to make me look bad. So could they screw up a little bit. I think I'm in trouble. Thank you very much, and welcome, everyone. I thought I might just start by talking a little bit about what we think the purpose of today is. I think over the last few years, we've talked a lot about COVID and the impact of COVID on us and on our business and the 10 years' worth of hospital hardware in 2, and what that means and what we need to do with it, what the goals and aspirations are with that. And we've talked about the likely impact of COVID having ongoing variability over maybe the next year or 2. So we feel like we've covered that pretty well. And what we'd like to talk about today is really what are the flow on effects of that big bolus of 10 years' worth of hardware delivered in 2 years. What else does that do for us over a bit of a longer term. Now we've got a diverse audience here, and we've got a diverse audience there online as well. So I thought I might just take a little bit of time to talk about how we thought about the business before COVID, and that's the slide in front of you now. Now our business started with humidification and intensive care with intubated patients. That's what we did for a couple of decades. Then the next sort of incremental growth driver was obstructive sleep apnea. For us, that was around about late '90s. Humidification and intensive care keeps growing. That's what we're trying to illustrate there. It still keeps growing at a decent clip, but the primary driver becomes OSA. Over the last decade or so, the primary drivers being respiratory support in hospitals, we actually started that journey 15 years ago, probably more visible to you 10 years ago. And then our thinking was that home respiratory support. So that's myAIRVO treating COPD in the home. That's the next likely incremental growth driver. And then if you think long term enough, that's got global distribution into respiratory support in hospitals, that's got global distribution into homecare. And if you think long term enough, you're going to need something else in terms of a distribution channel, and that was the surgical opportunity. And then again, I mean, I just mentioned Optiflow. We're maybe 10% into that journey, and we're 15 years into it. It was looking material maybe 10 years ago. So when you think like that, this opportunity for surgical, we need to start it. Well, not now. We've been on that journey for a good 15 years as well. So this needs to start now, or start much sooner. Then on the graph there, we've also labeled short term, medium term and longer term. And I'd say, roughly speaking, in this context for us, short term is kind of less than 10 to 15 years. Medium term is 10-year plus, long term is 20-year plus. So I don't want to totally disconnect that language from quarters and halves and years. And the aspiration was to double the business in constant currency terms every 5 or 6 years and do that in a sustainable way so we can keep doing it for a very long time. Now COVID came along, and that's what we're trying to illustrate here. And we're illustrating COVID with that bump in hospital respiratory support. Sets the hospital hardware largely. 10 years' worth going out in 2 years. And if we can -- and that's been primarily used for COVID, is what all the signals are telling us. And if we can convert that in something less than 10 years, we're ahead of where we would have been. So that has another implication. That means we need to pull forward home respiratory support. So for home respiratory support, historically, its growth and its usage has followed penetration in hospitals of Optiflow. So that should be like a natural benefit from increasing penetration in hospitals with Optiflow. And then the other thing that we've talked about that we really would like to see for that opportunity is more clinical data. So one of the things we can bring forward and we're bringing forward is more clinical studies, supporting more clinical studies, bigger studies sooner. And I put that in a medium timeframe bucket. And then finally, for everything we talk about, continually evolving the product is always something we can do to improve uptake on that therapy. And then the next thing we look at in the longer term is surgical technologies. Now when we look at Surgical Technologies, over the last few years, that's been about improving and expanding the product range that we offer there and building a global sales force. And shortly, this morning, Winston is going to talk about one of the expanded product opportunities in that category. Now that brings me to anesthesia. And anesthesia, it's a little bit confusing the way we talk about it. When we think about the therapy of anesthesia, it's in the Optiflow bucket. It's in hospital respiratory support. When we think about the core point, where the salespeople go, it's in anesthesia. So then we're thinking of it in the surgical bucket. And then timeframe-wise, we're most definitely thinking about it in the respiratory support bucket. So what we can do with anesthesia, I mean, we've been trialing this over the last 5 years. We've been trialing a specialist sales force calling on anesthesiologists. And we're pretty confident now that that's a good idea and it gets a better result. And it's an even better idea now when you look at the job that our hospital respiratory therapists have to do and you look at the opportunity they're trying to realize. We think it's even a better idea to have a specialist sales force. So we've been building out that special sales force globally over the last 2 years, and the plan is to continue growing it strongly certainly during FY '23. And in the sense of bringing things forwards, adding salespeople is something we can do relatively quickly. And we think this is an important opportunity for our business. This is a total addressable market of a size pretty similar to the hospital respiratory support business. So it's important, and it's something we can bring forward relatively quickly with more salespeople. And then the final thing is those new products that we talked about yesterday. And we're going to do a whole session on them today, Optiflow Switch, Optiflow Trace. They make using Optiflow in anesthesia applications even more compelling. So I guess the summary of all that is when you look at COVID-19, what it's really done for us, it's accelerated placement of hospital hardware due to COVID, and it's given us the opportunity to advance these long-term plans. So now I hand over to Lyndal to talk about some of the other implications of that.

Thanks, Lewis. Okay. So as Lewis mentioned, our long-term aspirations haven't changed, and that holds true for our margin targets as well. I'll talk through each of them individually and give a bit of a context around where we currently are and what our thoughts are going forward. In gross margin, we're currently around about 240 basis points below our target of 65%. As we've experienced significant supply chain challenges, as well as COVID demand over the last couple of years, we have been and continue to use more airfreight to bring in raw materials and to deliver our product to customers quickly. The cost of freight has been elevated since the beginning of the pandemic with restricted capacity and then more recently, with the shipping disruptions and delays. The increased proportion of air freight and the higher rates compared to pre-COVID-19 is currently impacting our constant currency gross margin by about 240 basis points. We don't see that the rates of freight will abate materially through FY '23, and we still anticipate needing to use a higher level of air freight during FY '23 whilst the supply chains and the shipping delays and disruptions settle themselves down. So if the freight impacts continue at the rate they are today, we would expect FY '23 constant currency gross margin to be similar to what it was in FY '22. We do remain confident of a return to our target of 65% over time. And we believe that, that is achievable, realistic and sustainable on average over the long term, so it remains our target. Our operating margin for FY '22 was in line with our target of 30%, as the freight impact of the gross margin was offset by the COVID demand-driven hospital hardware sales in FY '22. To achieve our aspirations, we would be aiming for operating expenses to have a compound annual growth rate of around 11% to 12%. Over the past 5 years, that CAGR is around 9%. So a bit low -- we're tracking a bit below where our aspirations would want to be. For FY '23, we are targeting to return to about an 11% CAGR from FY '20. That would result in a year-on-year growth in operating expenses of 13%. 2 percentage points of that growth comes from travel and sale events returning to more normalized levels compared to where they have been in FY '22, which is less than half of what we would have liked to have done. So on a like-for-like basis, if travel, sale events, et cetera, have been at normal expected levels in all years, we would be targeting an 11% growth in FY '22. So that target of growth of 13% in FY '23 is contingent on us adding people. And I'm sure you all know in this environment, that is challenging. In terms of the split of where that targeted 13% OpEx growth for '23 is coming from, we're targeting 20% in R&D and 10% in SG&A. As Lewis mentioned, we're really accelerating a lot of our R&D work, particularly the clinical trials in our home respiratory support, the myAIRVO side of the business and new product development, especially in the surgical space. In the sales area, we're continuing to invest people on the ground where we've placed all that hardware over the last 2 years to make sure we set ourselves up to take the best advantage of all of that hardware that our customers now have as well as to maximize that anesthesia opportunity. During FY '22, a lot of our sales teams were actually starting to travel more. And so that travel impact that I spoke about before, is more pronounced in the R&D line than it is in the SG&A line on a year-to-year basis. As well as investing in our R&D and our sales teams, we plan to invest significantly in our facilities over about a 5-year timeframe. Earthworks for our fifth building here on our Auckland campus are well underway. For those of you in the room, you'll be able to see that once that building is complete, we are at maximum capacity here in Auckland. This is a 40-hectare site and has well supported our growth for the last 20 years. To set ourselves up and support ourselves for the next 20 years of growth, we need an even bigger site. Work is really progressing well in identifying and acquiring an additional site within New Zealand, and we'll announce that as soon as we can and give you more information about that. Our third building in Mexico will be complete next month. And on that site, we have enough room for another 2 buildings beyond that. Our manufacturing strategy has adopted a little bit over the last couple of years to a more distributed manufacturing footprint. And that is so that we can be -- have more manufacturing sites closer to our customers and our supply chains. Again, work is progressing really well on a third manufacturing location outside New Zealand and Mexico, and we will announce that as soon as we can. We're in a fortunate position that we've got a very strong balance sheet. We've got net cash of about $200 million and a gearing ratio of minus 16% at the end of March. This allows us to be in a brilliant position to be able to invest for the future and invest in the business for the next 20 years' worth of growth. With that, I'll pass it back to Andy and Vandna. Thank you.

Yes. Thanks, Lewis and Lyndal. It's great to sort of hear about our expansion and just sort of more manufacturing sites somewhere else in New Zealand to go and visit. What did you think about that presentation?

I think it was really cool. It's nice to hear about the aspirations of our company, especially someone who's just started under 1 year ago and as well as kind of learn about the expansion of where we're going as well and the direction that we're taking moving forward.

Yes, absolutely. So who we hear from next?

Oh, I'm excited to introduce Andrew Somervell, VP of Product and Technology. He will be giving us an insight on how we do R&D here.

Thanks, guys. So as Lewis mentioned, my name is Andrew Somervell. I am VP of Products and Technology here. A big part of today is about introducing you to some of the new products that we're putting out to the market at the moment, talking about what the benefits of those products are for patients and caregivers and some of the technologies that enable that. Before we get into that, I just want to give you an overview of how we think about product development, how we think about R&D and how we end up by coming out with those really good products. So to start off with, I'm going to play a real short video. It's going to touch on a few themes that I'll expand on a little bit later on in this presentation. [Presentation]

Okay. So I'll touch on a few of those themes in a bit more detail as I go through the talk. But before I do, I really want to talk about what we're trying to do with our products at a higher level. Ultimately, that's about enabling growth by changing clinical practice. And obviously, our products are the key to doing that. They're actually what provide the benefits for the patients that are using them. It's not enough by itself, though. We need the better products. We also need to develop their evidence that supports why those products are better. We then need to go out hospital by hospital, educate people on why those products are better to effect that change. So it's a long and difficult process, but the products are the ultimate enabler of that. So when you think about what our products are trying to do, there's really 2 things. The first thing is to improve care and outcomes. And the second thing for us, it's about driving sustainable, profitable growth. So if you think about that first but improving care and outcomes, we want to develop products that have direct benefits for the patients that are going to be treated with them. This is helping them to recover from their illnesses more quickly. It's about reducing the chances of complications, ultimately improving the quality of life of the patients that are going to be treated with our products. It's also about improving the way care is delivered. Care is really, really complicated, and we want to make sure that caregivers can get the benefits of our products on their patients as easily as possible. And it's also about lowering the overall cost of treating patients, not about selling them products at a cheaper price, but enabling the whole health care system to be more efficient as a result of the products we're putting out there. So that's improving care and outcomes side of things. The sustainable, profitable growth side of things really is about developing products that's going to enable us to treat more and more patients over time. That's how we grow. But it's really important we do that in a way that is sustainably profitable. And from a product perspective, that really means developing unique technologies. So there's technologies that are really difficult for our competitors to replicate maybe they're protected by some form of IP. And those technologies are delivering benefits for our customers that are really truly valued so they can kind of want to purchase our products. Doing both of those things is actually really, really hard. It requires a lot of innovation for us and innovations where we got coming out with new insights all the time, new thoughts and really about finding new problems that are unarticulated and solving those. Many people think innovation is sort of about the technology side of things. But actually, it happens often before that. It's about finding an unrecognized problem. We're in a really good position. Here, we have so many different ideas of things that we could be working on. And often, the challenge for us is not really coming up with any ideas, that's actually picking which of those are the best for us to be working on. So I think one of the reasons we are really good at innovating, why we are really good at coming up with new products is the culture that we've got here at Fisher & Paykel. And I think of this as a patient-focused culture. We are always striving to do the absolute best thing that we can for the patients that are going to use our products. If you think about it, the patients aren't usually the ones that are picking our products. It's the doctors. It's the nurses. It's the respiratory therapists that are actually putting the product on to the patients and choosing what products they want to use. But ultimately, though, all of those people have the same job, and that is to provide the best possible care for patients. And if we just concentrate on that, then we're going to do the right thing by everybody in that care delivery. So you can kind of think about doing it right so it's best for the patient, it's true and north for us. Whenever we're trying to figure out which direction to go, this way, that way, we boil it down to what's going to be best for the patient, we're going to do the right thing in the long term. Now patient care is really, really complicated. The patients are complex. They're really varied, and the way that care is delivered to those patients is really complicated and varied as well. That's a good thing from our perspective, though. That complexity provides us a lot of opportunity and provides us an opportunity to simplify the way that care is delivered. In order to take advantage of that though, you really need to understand every aspect of patient care really, really deeply. And we are -- we do that. We have that really good understanding. But understanding and then talking amongst ourselves coming up with -- identifying new problems and ways that we can solve them that leads to the innovation. And one of the ways we set ourselves up to gain the understanding is to set up our teams to what we think of as patient-focused product groups. So these are teams which have got a really diverse range of different skill sets in them, different engineering disciplines, marketing, clinical, scientists, et cetera. And their job basically is to develop the best product for a particular set of patients. So we think that, that approach enables that understanding, enables those discussions to happen between those individuals and come up with the best -- recognize new problems to come up really in a bit of ways of solving them. So I'll talk about that in a little bit more detail here. So kind of around the outside of the slide. I've got some examples of some of the things that we need to understand really, really deeply. Now if we do understand these things really, really deeply and we understand how they interact with one another, that sets us up to innovate, sets us up for original thought, sets us up to find those unarticulated needs, ultimately leads to better products and what we're after, the growth that we're after. I'll talk through a few of those in a bit more of an example. I can't talk about them, but I will talk about a few of them. So I'll start with physiology, the physiology, the pathophysiology of patients is really, really complex and it's really varied from patient to patient. The mechanisms of action of the products that we are developing are also complex. And to start off with, they're often not particularly well understood. And what's important for different patients is very different often. Because we're at the forefront of developing these technologies, we understand these things better than anybody else in the world, and it sets us up to continue to innovate. I've got clinical workflows out there in this example. Clinical workflows, the way that care is delivered to patients is complex and it's varied. It varies from country to country, from hospital to hospital. But we need to develop products that work seamlessly with all of those different stakeholders in all of the different ways they provide care to patients. We also have to realize that what we are doing is often quite a small component of what a clinician is doing. And when we're developing our products, we need to make sure that, that it is fitting in with everything else that they're doing. But in order to do that, we have to understand that really, really deeply. Uses in the use environment. Our products are used in all sorts of different settings by all sorts of different clinicians. The way that care is delivered and the environment in an ICU is very different than an ED department, in a ward or perhaps a home and the clinicians in those areas have a completely different set of problems and different sets of skills. If we understand that better, we understand how patients are moving between those environments better sets us up to really solve a lot of the problems in those different areas of the hospital. Developing all of that understanding is really, really difficult, takes a really, really long time, like years and years and years to develop that deep understanding. We think that ultimately, that's really a big part of what sets us apart is the depth of understanding we've got in our teams here. So I want to move on to talk a little bit more about some of the more specific things that we do to enable our teams. And the first one of these and perhaps the most important one is to make sure that we have the absolute best people working for us. And we're in a really good position here. Being located in New Zealand is a good thing. It's an attractive place that people want to come to. And our reputation and size with a New Zealand place is to our advantage as well. We've got a great reputation in New Zealand for innovation. People want to come and work for us because of that. If you look at their different engineering departments from universities, all of the relevant students pretty much are applying for jobs here when they're coming out from -- graduating from their studies. And that sets us up in a really good place to get the best talent in here. So I want to talk about the importance of access to user environment, in particular, getting out the product development teams that are actually involved in development of products, we -- it's firsthand access to those environments. That's the best way of learning rather than hearing secondhand through clinicians or through sales, through our sales teams, perhaps actually getting up people developing products into those environments, seeing the problems firsthand, we think, sets ourselves up so that we can learn and develop the best possible products. A good example from that I think, is our relationship with Middlemore Hospital here in Auckland. We have at any given time, if you go out into Middlemore Hospital, you're going to see many of our engineers out there and the intensive care environments in the wards, observing how care is delivered is seeing our products and use and learning from that, bringing that knowledge back into New Zealand, into the team here. So the next bit I want to talk about is make the importance of dealing with the absolute best in the world. I'm kind of thinking of this in 2 categories. The first is the clinicians that we deal with. So when we do product development, we're not doing it in isolation here on the site. We're doing it with clinicians around the world. We want to make sure that we are working with the absolute best when we're doing that. So our reputation helps get out to those people. But I think more importantly that the culture that we've got, that patient-focused culture, that wanting to do the absolute best thing by the patient comes across. And as a result of that, those patients are always wanting to work with us. That's really, really helpful when we're going out there testing, getting ideas and testing our products. I also think about this from a technology perspective as well. So we're not just sitting here talking amongst ourselves, we're going out and to the best technology experts around the world. And our approach to that really is to try and work with them to try and not to set them to a task, but to work alongside them, learn from their expertise and bring that expertise back into Fisher & Paykel, and it's one of the ways that we grow our expertise over time here. Another aspect, I think, is really, really important for us is making sure our teams here have always got access to a -- really easy access to the best prototyping equipment, the best testing equipment. And if you do walk around here, a bit later on. You're going to see that we have labs and model shops scattered all throughout the campus here. It was really easy for an engineer to get up from their desk, walk a few meters, go into a room, so where they can prototype something, where they can test something. And we think that's a really, really important part of the way that we do product development. If we have an idea, we want people to be able to build it and test it really, really quickly, learn from it, iterate that important part of our way we do product development. Last point I want to touch on is the importance of having manufacturing and R&D on the same site. So a few -- when you go on your tours today, you're going to see that the only thing that separates our product teams, the R&D teams from the manufacturing environment is a glass wall. At any given time, our R&D teams can go out into the manufacturing environment and have a look at what's going on out there, and that's really important for us. So a lot of the time, the challenge for us is not just what should the product be, but how are you going to make that in hundreds of thousands, millions per year. And that challenge is really, really difficult. We think the best way of enabling our teams to do that is to make sure that they can go out into that environment really, really easily. That's a big part of why we have manufacturing co-located with R&D on this site. Looks like I've given you guys a few insights, I think, into the way that we approach development, a few things that we do to enable some of our teams to do that. You're going to see the results of some of these when we talk about some of this process when you go out and look at some of the products. And I hope that some of what I've talked about comes across from those teams. But I'm going to stop there, then I'll hand back over to the team.

Yes. Thanks, Andrew. It's always inspiring to hear that talks and similar talks. One of the things you did touch on was in the Daniell building, as you take the tour, I definitely encourage you to take the tour. No matter where you are in the office building, you're always able to see our manufacturing facility. And that's really key to getting that R&D and manufacturing working really, really closely together. The other really cool thing we touched on, which is another core part of our culture, is Care by Design. And V, what does Care by Design mean to you, not to put you on the spot, but as a young engineer?

I guess it kind of means having empathy for the patient, but not only the patient, also the nurses, the doctors, anyone that's actually interacting with the product.

Yes. I mean it's a really key part, right, is we can all be patients. It could be us. It could be a colleague, friends, loved ones, investors. It could be anyone. And so by holding that sort of really central to who we are and keeping it in mind when you design it really leads to better outcomes, we believe. Yes, definitely.

Yes.

Yes, cool. Okay. Moving on to the next bit. We're going to invite Winston Fong, our VP of Surgical Technologies; and Chris Crone, our GM of the Airvo Optiflow Group, to give brief introductions into what we're going to cover off next, which is our breakout sessions.

Good morning, all. So as Andy said, I'm Winston, the Vice President of Surgical Technologies. Following on from what Andrew talked about, I've got the great opportunity to talk about the outcomes of that. So I'll be covering, and myself and the team. We'll be having these breakout sessions, and I'll be talking about 3 new products, which is a result of the way we go about working things and developing these better products. I'll be covering 1 in surgical humidification and the 2 we announced yesterday with Optiflow Switch and Optiflow Trace, which is a brand-new area of a hospital where we can treat patients with Optiflow. And it will be the first time we actually talk about it out to the public as yourselves.

My name is Chris Crone. I'm the General Manager of the Airvo Group here at F&B. And my colleague, Sam and I, will be introducing some of the great new features of the Airvo 3 device. We're going to be covering some of those features and how they enable us to treat more patients in more parts of the hospital by more clinicians. And we've got an exposition. We've got 30 minutes of exposition with some of the engineers from our team, and we're looking forward to giving you some hands-on experience to those features of the device.

Thank you so much. I hope you all are excited for the upcoming rotations. I know I am. I might have to sneak into one of them later. But just a little bit of, I guess, like info. We are -- we will be entering laboratory spaces, and often these are used as simulative environments, so hazards are present and that can include high-pressure gases, high-voltage equipment, hazardous chemicals. And no food or drink, obviously. And don't take any pictures. I know we're pretty, but please refrain.

I'll be available for selfies a bit later. Look, I think the key message in the labs is just don't touch anything. There's lots of hazards there. Yes, just stay away from everything. Okay. We've got a bit of logistics going on. Now when you came in, you would have noticed on your badges that there were 2 colors. There was purple -- sorry, blue and orange. So if you're in the blue group, you're going to be seeing anesthesia and surgical rotation first. Now Dan is going to be your guide. So you're going to follow Dan. Dan, put your hand up. He's just over here. If you have an orange name tag, you're going to be going and seeing the Airvo 3 rotation first. Reline, who's over here, is going to be your guide for the day. Now the key thing is Dan and Reline will be your guides for the day. They won't swap. But we will give you an opportunity to swap the breakout experience. Okay.

Have fun, everyone. See you back at 12.

Yes. Great. Enjoy yourselves.

Welcome back. That was a summary from our executive team about what relentless innovation looks like here at Fisher & Paykel Healthcare. And I guess a takeout for me is innovation's pretty difficult. And it's all about that unarticulated problem, Harris.

Yes. Speaking of that problem, as an engineer myself, we had to deal with that kind of problem. So for example, the nurse would like a flexible circuit. And we ask ourselves, what does flexible actually mean? Is it a flexible metal chain? Or is it a flexible wire that you can bend, or it could bend back? So stuff like that, that we had to really dive deep to figure out what they want.

Yes. That's awesome. And then of course, you did and you come up with incredible circuits like you guys have. I think the other thing is that clearly, there's a focus on the patient, and it's a driving force for our innovation. You must see that in your engineering, too.

Yes. Yes. So the example there. Definitely, the patient is our #1 focus, and we want to do exactly what they want and when they need it.

Awesome. So what's coming up next is our first showcase of our surgical products, as you heard the guys in the live room saying. Our audience is now walking down there. And they're going to be -- what we're going to be showing you is our new Optiflow Trace and Optiflow Switch, which allows new interfaces, fresh from that announcement yesterday.

So while they're making their way down to the lab, we thought we showcase a new product from the NIV business.

We are in the studio with Laurence Gulliver, who is our GM of Noninvasive Insulation. And Laurence, you brought for us today a mask called Visiro. So welcome. We'd love to hear more about this.

Welcome, Laurence. And yes, could you tell us more on how the product was made, designed?

Absolutely. The Visiro mask is an NIV mask made for hospital, and we saw really an opportunity to improve the comfort for the patient and the usability for the caregiver. And of course, that's very on theme for what we do at Fisher & Paykel Healthcare, an opportunity to improve patient care. And we then collaborated with an in-team house, the homecare interface team, and created a seal, which we think is really clever and does some great things for the patient.

It's good. And I love hearing about the collaboration between teams. That's definitely something we do well here. So I've read some of the materials and the promotional materials that talks about bridge-free NIV. Can you explain what that is?

Yes, sure. So bridge-free NIV probably sounds obstruct. But when we talk about the Bridge, so that's the nasal bridge. So that's the part of the facial anatomy that with conventional NIV masks is probably most susceptible to discomfort for the patient. So the whole idea behind the seal and this design was to totally avoid that part of the face and to seal over the nose and mouth without being on the nasal bridge, and I'll show you how that works.

Nice. Yes, nice and away from the eyes.

That's right. And we call it under the nose seal. And it was done with a particular, I guess, attention in mind around making it most comfortable for the patient, including taking things out of their field of vision. So unlike some other masks where we see rigid material in the field of vision of the patient. We've been able to achieve a stable, comfortable mask with nothing in that field of vision. And for someone who is [indiscernible], you'll appreciate that, that really helps for a patient who wants to take off, put on the glasses. And the other thing that moving the seal down away from the nasal bridge does this helps with leak discomfort. So a really common place for an NIV mask, noninvasive mask to leak is around the eyes. And when it leaks into your eyes, that's really uncomfortable, that can blow on your eyelashes, which are patient feels, over a longer period of time, it can dry out the patient's eyes and a patient can end up actually shutting their eyes to avoid that discomfort. And I'm sure you can understand that a patient who's in a hospital environment potentially under respiratory distress. They already have a degree of anxiety. And so them having to close their eyes to avoid discomfort, it's just another layer of stress discomfort that we think that we can take away with a design that avoids that.

Yes. It's also just the general claustrophobia, right? Just hopefully gone. Nice.

Another point on the materials True Fit. Do you mind explaining. Timford, you mind explaining what that is?

Yes, sure. So [ True Fit ], it's a feature of our mask. It's actually not a new feature to this mask. We've had it in previous. [Audio Gap]

Haven't really talked about before. So I'm going to give you a bit of an overview of these products, and then there will be a number of team members supporting me as well. I'm looking out for them. So we've got Matthew back there, Samantha, Ali and Chris. So after I talk, we have a bit of a breakout session, and we've got 4 kind of booths around the place. And we'll just break you up and you'll rotate around the booths. So obviously, we'll have one here around surgery, another surgery one back there, and then Optiflow Switch and Optiflow Trace. So I kick things off, I'll cover the surgical modification one first. And what we've got here to announce today is that we have developed our very first surgical humidification open abdominal diffuser. We've talked about it a little bit in the past. But what we've been doing in the past was learning about this environment with an off-the-shelf diffuser. And the lessons learned with this was that the surgeons, they certainly value their therapy, they value their benefits it provides. However, this off-the-shelf diffuser is just simply difficult to use. So a challenge was set to the team here, not too long ago. It was actually Ali and his team back there. So you'll hear from him directly. It's to develop a product which is going to deliver the right level of therapy; Two, it was to make it easy to use; and three, make sure it doesn't get in the way of all the complex surgery activities. So open abdominal surgery, so it's obviously in the abdominal space. They do a large incision and they retract that back. So we use tools like this to go into there, and it retracts that surgical space throughout the whole surgery. So on the operating room, they're actually quite cold and dry environments, and there's a constant laminar flow through positive pressure ventilation in operating room that happens. And that can contribute towards the patient getting cold. It can cause the surgical sites also to get cold and the organs and tissue to dry up. And what that means is the patient can get hypothermic which is certainly not a really good thing. That can then relate to surgical site infections. During surgery, it can cause more bleeding, which then patients could require more blood transfusion. And then postoperatively, there could be shivering and that energy is going towards shivering rather than recovering. And then surgical site infections and the likes can also mean increased recovery time, increased length of stay. So the team, they developed this device. It looks quite simple, and that was part of the challenge they put. You simply peel this off, put it on to the retractor and that simply stays -- that's connected to the humidifier, and that simply stays and provides that surgical humidification throughout that entire -- the surgery time. That could be easily 3 hours or 6-plus hours for some of these procedures. So this helps address the -- some of those complications which I mentioned. It helps maintain the patient's temperature. So they maintain normal thermia. It can decrease surgical site infection, among the other complications. And these complications today are a huge cost to the health care system and by providing this, it provides those benefits on those better outcomes for the patient. So now we've released our first one. We're really confident in changing that clinical practice and improving the care and outcomes of the millions of patients that undergo a laparotomy, which is open abdominal surgery. So now I'm going to talk about Optiflow. That's what I was going to cover, and you get to hear more details. Chris is actually going to be presenting here, giving you more details about the surgery, the therapy, the benefits of the product, those complications. Ali will be behind you on that booth there. He'll be talking about some of the technology and innovation that goes towards what might look like a simple product. It's amazing innovation behind that. So now we're going to talk about the anesthesia products, which we introduced. So these patients undergoing a wide range of surgeries, including the likes of laparotomy, they get an anesthesia. And this anesthesia actually causes a respiratory compromise. So about 10 years ago, we started exploring how can -- or before that, if you think about the mechanisms of action of Optiflow, I think you're quite familiar with Optiflow now, but you're talking about the humidification, the positive pressure, the oxygenation, and we were trying to determine how Optiflow can help these patients, which go under anesthesia and have this respiratory compromise. So working closely with anesthesiologists, being in that environment, we developed the products, and we obviously released the 2, which we announced yesterday. And what this helps with is it helps facilitate the use of Optiflow in the anesthesia practice. And it basically extends where Optiflow is today to a new area of the hospital, which we haven't been doing in the past. So now I'm going to walk over for this model here to talk about Optiflow Switch. Going to go get the products myself. So I can imagine the patient, which I kind of spoke about, they come into a hospital. I'm going to pretend to be an anesthesiologist. But trust me, you don't want to be looked after me. So what happens is the patient comes in and the anesthesiologist will pre-oxygenate that patient. So this is in the operating room, they put those traditional anesthesia mask on top. And what that does is it builds up their oxygen reservoir in their lungs. Soon after that process, they use an anesthesia, they put that into the patient. They use the likes of a neuromuscular blockade. And very soon after this, the patient is going to stop breathing. That's part of the practice. So because they're not breathing, they're going to have to use one of these things called a laryngoscope and put a tube down their throat to be ventilated by one of these machines. So I made that process sound pretty simple, but it is actually -- can be very difficult. So -- sorry, as I said, so before they do that intubation, though, they traditionally can also use this face mask to check that the patient is ready to be intubated. They might give them some extra breaths just beforehand. So that process can appear to be quite simple, but it can actually be very difficult. Some patients, they are very difficult. Some patients are very easy and then some patients can also be very unpredictable. So basically, from that time when the patient stops breathing, you've got a limited amount of time to obviously incubate that patient and get them ventilated. They -- so at that time, if you don't get that done in time, the oxygen levels in your blood drops down to critical levels. I think we all know the importance of us breathing and giving oxygen. As well as that because they are restricted time, it can be quite stressful. You can cause a bit of airway damage or you could actually cause some broken teeth. So that time criticality, that's going to be quite a bit of under pressure and is very difficult. So what Optiflow Switch does, and it helps with the entire process. So if we can replay that process, the patient comes in. You put the cannula on, and that pre-oxygenation starts happening immediately. You give the same the anesthesia, the neuromuscular blockade. And then very soon after, when you want to make sure when a patient starts breathing, you want to make -- do those checks still. What you can do is use the traditional anesthesia face mask and put it directly on top. So you do those checks, and they're ready to be intubated, do give them the extra breadth. And this step, you can't -- we'll want to make it seamless for the anesthesiologist to use the products. You can't do this with any other cannula. So after that, obviously, the patients stop breathing and you're ready to start intubating. That oxygenation, when you take the mask, it continues immediately. So in terms of that time I talked about from when the patient stop breathing to you intubate that's already continually providing oxygenation. So you can -- it gives you a more calm environment, enabling to do that intubation safely. So benefits of Optiflow Switch, that helps with the pre-oxygenation, enables -- it's compatible with your traditional anesthesia face mask, so it works seamlessly through that process. And lastly, when the patient is not breathing, it provides that additional oxygenation giving you the extra time to safely intubate that patient. So there's a whole range of other procedures also. And so [ Matthew ], as I mentioned, is going to be here. He's going to be providing more details around Optiflow Switch, around the procedure, and you'll see the product in action as well. So there's a whole range of other procedures, which what they do is they do them under what they call sedation as a large portion of those. And sedations mean you put the patient asleep, so they're not aware of the procedure but the patient is spontaneously breathing. They're still breathing themselves. So they don't need to be intubated and ventilated by this machine. However, that sedation that you get can certainly impact your breathing. It can repress your breathing. So there's still an increased chance that you'll have a desaturation. Again, the oxygen in your blood dropping down to really critical levels. So this is Optiflow Trace. So you can imagine, again, the patient comes in -- I think someone else has been practicing and modeling things around. So a patient comes in and you put the cannula on and it provides the oxygenation. So if you think about the humidification, the positive pressure, it helps decrease the chance of a desaturation. So -- and the other key thing is we've also integrated a carbon dioxide sampling line. So obviously, when you're exhaling and inhaling. When you're exhaling, CO2s coming out. So this helps measure or take a sample and enables the anesthesiologists see that the patient is still breathing. And this is happening whilst we're providing the nasal high flow. So why that's important? Obviously, you see the patient's still breathing. If you recognize they stop, enables the anesthesiologist to immediately intervene and get them breathing again. So the benefit here, Optiflow Trace, provides that oxygenation, decreases the chance of that desaturation and it enables and supports the anesthesiologists to see if the patient is still breathing, enabling to take action as they require. So in terms of Optiflow Trace, [ Sam ] back there is going to be talking through that product. And again, you can see, obviously, the Trace element in action as well. So we've been doing this kind of investing in this over the last 10 years. We're building that deep knowledge around anesthesia. We've been learning and what we've been learning about the anesthesia practice, the environment, the complications, the patients. So we've been learning all about this. And that's kind of resulted in the release of these 2 new products. As well as that, we've been building the clinical evidence. So the clinical evidence, I know you're all aware, is very critical to support the change of clinical practice. So if you can imagine the hierarchy of clinical evidence right from down the bottom, kind of cohort, kind of basic opinions, case studies, the lower quality, lower mature evidence right up to the top of your [ meta ] analysis and systematic reviews. So about that 2014 kind of '15 timeframe, we started seeing the publication of these case studies, these opinions of Optiflow and use in the anesthesia setting. So starting to show there's interest in this possibility. A couple of years on, we take an observational study. So investigations of Optiflow in use and starting to show real promise that it's actually very beneficial for the anesthesia setting. And then 2018, these are just [indiscernible] numbers. You're going to see large, high-quality random-controlled [ roles ] in the space. And they're comparing Optiflow in terms of an intervention against the standard of care. And we're starting to see large volumes of that and continuing as well. And because of those high-quality random control trials more recently, so last year, we started already seeing [ meta ] analysis and systematic reviews for the use of Optiflow in the anesthesia practice. And this reflects the strong clinical evidence that supports the use of the space already. So I'll give you one example of a clinical study. This was published in 2019. It was done by [ Lin Etell ]. And it was comparing Optiflow against the standard of care, which is a low flow oxygen cannula in gastro endoscopy procedures. So there was 1,994 patients for the study, which is a really large study. And the results of that study was there was a significant decrease in desaturations, so from 8.4% down to 0% with Optiflow. As well as that, there was, in terms of a number of interventions to require that -- to get -- to open up the upper airways, make sure the patient's airways open for their breathing, that dropped from 23% down to less than 1% with Optiflow. So there's a lot of other clinical evidence supporting similar things where there's significant decrease in desaturations, significant decrease in the number of interventions or disruptions to surgery, extending that at near time, which I talked about, to enable the safe intubations. So what the clinical data tells to me, shows me is that there's certainly a long runway here with a lot of wide range of patients that can be treated by Optiflow. And it also shows that we've made strong progress towards creating the evidence to change clinical practice already. So I guess in summary, I've talked about 3 new products. We've got strong and growing clinical evidence. We've got ongoing innovation, and that gives me great confidence that we can change clinical practice and establish that sustainable profitable growth, both in surgery and anesthesia. So that's my quick overview. Hopefully, that provides a great introduction of what we're certainly excited about. And now what we're going to do is do the little breakout, many breakout sessions. So I think the easy way to do this is somehow split yourselves into 4 equal groups. Perhaps the groups, the bunch of you here could go towards Chris. The bunch kind of here go towards Ali, that way there, the middle group.

Thank you, Winston, for a great overview of our surgical and anesthesia products, products that facilitate the use of Optiflow and the anesthesia practice and basically extend the use of Optiflow into these other areas of the hospital.

Yes, for sure, Fi. It's great to know that the anesthesia's time to complete the intubation. If I was put under, I would like my nose to be able to not hurt me in the process of course. What else did you find interesting?

I think that model with the CO2 sensor, that is awesome. I mean how great to know that not only am I going to remain oxygenated with that Optiflow, what is it, the Trace here. But also my anesthesiologist is going to recognize if I stop breathing and do something about it.

So wow, right now, as you heard from Winston in that presentation, the on-site audience is going to be shown around some show and tell stations. And as promised, we would like to show you as well. So enjoy.

So I've introduced our new release of our open abdominal surgery diffuser, and now we're going to have a chat with Chris to better -- get a better understanding of that. Hey, Chris, I see you have a patient -- a model here on the table. Obviously not a real patient. Can you tell me a little bit more what's going on here with this patient?

So let's imagine this patient's being diagnosed with a colon cancer. So it's [ common ] being anesthetized, laid out in the table and we're about to conduct an open surgery on them. So a long incision is created and that wound is retracted by typically using another retractor. So the patient's on the table for a long time. And during that time, the cold, dry environment can really cool down that wound and create a lot of risks for that patient.

Okay. So you mentioned the cold, dry environment. [indiscernible] the patient?

So the operator there is really moving quite quickly. It's changed [indiscernible] about every 3 minutes. And that can desiccate and cool the wound right down, which impacts the core temperature of the patient as well. So that can create the risk of obviously desiccation of that wound, but also by cooling the patient down or increase the risks, they'll bleed more and require blood transfusions.

And other things postoperatively?

So as the patient recovers once you have successful operation. They move into a recovery room. They more likely wake up cold and shivering, increased risk of getting a surgical site infection as they recover, and that will [indiscernible], they'll stay in hospital longer and take them longer to get home to their families.

You're right. So see, we have introduced our first open abdominal surgery diffuser. How does that really help with that? Can you demonstrate it for us?

Of course. So this is the diffuser here and we're designed to make it really easy to implement into that surgical field simply by sticking and adhering to the retractors that are already in place. And that creates a steady flow of warm humidified gas to that patient to fill up the wound and really stop that desiccation effect and keep their patient warmer, so they get into the recovery room in a much healthier state.

Well, cool. Thanks for explaining that, Chris. I think that's going to really help the patient. So really excited with the release of this new diffuser. Thanks, Chris. So we talked about the patient and therapy, and now we're going to talk to Ali about the product and some of the innovation behind this. Good afternoon, Ali.

Hi, Winston.

And to kick things off, can you talk me through the rest of the surgical humidification system?

Yes, absolutely. So what we've got here is a traditional humidifier and a chamber. It's just been specifically tuned for the surgical environment. In order to combat the cold environment when we add heat and humidity to the gas that we deliver, we run it through this inflation tube. Now this is inflation tube has got gill tubes inside it to create an air pocket of insulation around the flow path. It also has a heater wire that runs a length of it. And all of that is trying to do is maintain the temperature and humidity all the way to the newly released diffuser, which attaches to the end.

Awesome. So if you recall, I'm sure you do, the challenge was set for you and your team to make an easy-to-use interface, let them get away over the complex parts of surgery and deliver the right level of therapy. Can you explain to me what you're kind of done for the first 2?

Yes, absolutely. So I've got the open surgery diffuser right here. And what -- how we've designed it is to try and make it as small as possible and as low profile as possible so that doesn't interfere with the surgeon's operation. It also has an adhesive backing that peels off and attaches [ to any ] retractor that they're using. There is also a deformable element inside it that allows it to conform to the shape of that retractor. So it can work on one like this or one that's more square. It also is able to stay there and last the duration of surgery, anything from the 3-hour ones all the way up to the really complex ones that are 6 or 7 hours long.

Cool. And then the last challenge around how do you deliver the right level of therapy. Can you demonstrate that to us?

Absolutely. So if we come over here, and I'll explain a little bit about the setup that I've got here. So I've got a simulated open wound, and it's currently being retracted by very commonly available retractors and the diffuser is attached there. It's got a -- there's a lot here to help me visualize the delivery of humidity that's in there. It's normally invisible. It's currently being filled right now. But in order to help with that, I'm going to add some vapor into the flow path to help demonstrate that. So you can see the wound being filled with humidity and it's nicely covering it and flowing over the sides. Now why that's important is that, that's how we get the maximum heat transfer between the gas that we're delivering and the patient. So by increasing the contact time between the gas and the patient, we increase the heat transfer that we're able to deliver. And by doing so, that's how we keep the core temperature to where it should be and prevent hyperthermia. The other important thing that we can do with that is actually we prevent any evaporation from occurring from the patient themselves by preventing that evaporation and desiccation. And by doing so, we also minimize the cool -- the -- any effects on cool temperature.

So whilst you're developing this, you and your team say it's very difficult to do.

It is.

Can you kind of explain what makes it difficult to do? Why is it difficult?

Well, I think the easiest way to do that is if I demonstrate what would happen if I attempted to do that without our new diffuser in place. So if I just use a normal open end of tube and try to fill this wound right now with exactly the same gas as I was using before. You can see what happens. So it goes everywhere and it doesn't actually create that coverage that we were getting with the other products.

Excellent. So that coverage is -- the filling of the wound is really important.

Absolutely. It's extremely important to get the heat transferred to the patient.

And that heat transfer helps with hyperthermia. So I see that hyperthermia helps with reducing surgical site infections. During the development that we went through, you also identified a mechanism of action that helps potentially reduce surgical site infections. Can you tell me but about that?

Yes, I'm just going to fill it again so it helps me explain it. So what you can see there when the wound is completely full, and we've got maximum coverage is that we are creating a protective bubble around the wound. And what that protective bubble does is actually any airborne particles that are floating around the theater environment, which often are viral or bacterial if they make their way into that wound, they can cause a surgical site infection post-operation. And so what I've got here is just a demonstration of what happens with those particles when you've got a simulated wound model. On the left, you've got no therapy being delivered. So what you can see is the particle is clearly making their way into the model and inside the, where the organ should be. And then on the right, you've got the wound being filled with therapy, and you can clearly see a deflection line around the entire open wound. And this is actually from a paper that we published that shows a reduction of particles up to 5 microns, 1,000-fold over between with therapy and without therapy.

Nice work. Now well done to you and your team. Thanks, Ali. It's really great to have this new open surgery diffuser, and really looking forward to continually improving the care and outcomes of patients. So we've introduced the 2 new Optiflow interfaces, and now we're going to talk to [ Matthew ] to talk about Optiflow Switch. Hi, [ Matthew ].

Hi, Winston.

So I briefly introduced that intubations in some patients can be very difficult, some can be easy and some can be very unpredictable. Could you talk us through that a little bit and what actually happens there?

Sure. Well, I'll tell you a little bit about our new product called Optiflow Switch. But perhaps before I do that, I'll also tell you about a very, very special person in the world of anesthesia, and her name is Elaine Bromiley. And Mrs. Bromiley was a 38-year-old mother of 2, and she suffered from a sinus complaint and she presented for an elective procedure at a tertiary hospital in the U.K. She was under the care of a senior anesthetist and a senior surgeon. And what happens when a patient comes into an operating room from an anesthetic point of view as we first fill their lungs up with oxygen using a mask like this. So typically, that's held over the patient's nose and mouth for about 3 minutes, and I'll talk a bit about why we fill their lungs up with oxygen in a moment. After that, we give the patient an anesthetic or something like this, and that puts the patient off to sleep. It's also common to give a neuromuscular blockade like this one. And that paralyzes the patient, which optimizes conditions for surgery, but it also, of course, has the side effect of stopping them breathing. Now when the patient is not breathing, for someone like me, I would go for about maybe 2 minutes before the oxygen level in my blood got down to a critical level. But for people who have high-risk factors, like being high BMI, maybe being pregnant or being elderly, that could be as little as 30 seconds, which isn't very long. And even with the oxygen that we put in at the beginning that roughly doubles those times. So it's still quite a short period of time. And during that time, what we're going to try and do is put a tube like this down into the patient's airway and that tube will then be connected to the ventilator and the ventilator will replace the patient's breathing so will be providing oxygen, but also taking away the carbon dioxide. Now in the case of Ms. Bromiley, they had some difficulty getting that tube in. So her anesthetist had several attempts at doing that. When he was unable to do that, he called for help. Another anesthetist also attempted to put the tube in and the surgeon also had a go at doing it. Unfortunately, none of them were able to put it in, so they decided that they would abandon the procedure, wake Mrs. Bromiley up. So they [indiscernible] recovery to do that. Unfortunately, she never did wake up and she passed away some time later. And a subsequent inquiry showed that the oxygen level in her blood had been too low for too long and she'd suffered an unsurvivable brain injury.

Well, that process certainly does sound very difficult and prone to a number of complications. Can you talk us through how Optiflow Switch can help with this?

Sure. So this is the Optiflow Switch interface here. And what happens is we just place that in the patient's nose like that. And we provide quite a high flow of oxygen through that interface. And this has 2 benefits. So the first is that we can fill the patient's lungs up with oxygen before the procedure begins, but we can also leave that in place while we're trying to place this tube. And that delivers a continuous flow of oxygen. And so even with the patient not breathing, we can actually get quite a long time before the patient gets to a level of oxygen, which is critical in the blood. So that provides a greater sense of security for the anesthetist and also for the patient. Now one thing in anesthesia is that the anesthetist often will want to deliver [ breaths ], and I'll describe this mask again, and they do that through a mask like this by placing it over the top. Now normally, with an Optiflow cannula, we wouldn't be able to do that. But this one is unique. It's got a collapsing section here. And so when I place the mask over, that cuts off the supply of oxygen coming from the high flow so that we can then deliver the [ breaths ] through this mask. But when we take the mask away, the oxygen automatically starts flowing again. So the patient's never without oxygen. So that's our new Optiflow Switch interface and a little bit about how we use it in general anesthesia.

Excellent. Thanks, [ Matthew ]. So that really shows that the number of complications and the difficulty that you can experience and how the benefits of Optiflow really provides, and we're really excited to see how Optiflow can be exceeded to anesthesia practice. So now we're going to have a chat with Sam about Optiflow Trace. Hi, Sam.

Hi, Winston.

Could you talk us through one of the procedures where they use Optiflow Trace and where the patient's sedated?

Yes, absolutely. Why don't I take you through a bronchoscopy? So bronchoscopy is used to visualize the patient's lungs, and airways for a variety of reasons. But what would happen is the patient would come into the procedure room for the sedation. They'd be hooked up to various monitoring, so there's a blood pressure [ cuff ], some oxygen saturation. Anyhow they'll get ready. Once they are, what we're going to do is we're actually going to sedate the patient with a drug like this. With the sedation, what's crucial is that the patient remains unaware of what's going on, but they keep breathing for themselves. Once that's all happened, we'll introduce a back block so that they don't bite down on any [ piece ] of bronchoscope and then we'll be able to go and visualize the lung and the airway.

So I understand there's a number of complications that may cause a respiratory compromise. Can you explain that a little bit more?

Yes, absolutely. I'd like to think about it in sort of 3 different groups. So the first group of factors we have is our patient factors. So that could be high BMI, pregnancy, elderly. All of these are going to make it more difficult to keep our patient oxygenated. Then we have our anesthetic risk factors. So this could be in this scenario we may over-sedate our patient and they may stop breathing for a time, again, leading to compromises and oxygenation. And then finally, we have our procedure risk factors. And this, when we're using a bronchoscope, could be the unintentional obstruction of an airway again, leading to that problem with oxygenation. And when we have a problem with oxygenation, we're going to need to intervene. And that could run the spectrum from doing a chin lift and removing the obstruction. It could be waking up [indiscernible] take a breath for me, or it could be stopping the procedure and having to reschedule. This all adds time and complexity to any of our sedations where this occurs.

Yes. All right. Thanks. So I know you are one of the engineers who developed this product. So I know you're really passionate about it. Could you explain to us how it helps with the sedation procedures?

Absolutely. So Optiflow, we know is really great at oxygenating and we also know it's really great about removing CO2. So what we're going to do is heat and humidify our gas through our humidifier up to our nasal interface and see if the patient is coming in and getting hooked up to the monitoring, they're now actually [ wired into ] an Optiflow interface and continuously receive oxygen throughout their procedure. This means we can maintain their oxygenation, reduce the chance of the desaturation and reduce those complicated interventions that may add time and complexity.

Well, so you probably can't wait for me to ask this one. What is this?

So this is Trace. So what is really crucial, as I said, for sedation is that we know our patient is breathing because that is how they're going to stay oxygenated. So what is Trace? What we've got is a thin, flexible tube that hooks up to our monitoring. And what we can do is sample the patients expired gas and be able to see breath by breath that they're continuously breathing throughout the procedure. Do you want to have a look?

Yes, definitely, if you can.

Okay. So I'll just pop this on.

Can you hold your breath, Sam, and see. Can you go see a flat line. So that's a desaturation. Is it?

Absolutely. And now I'll start breathing again.

Thanks, Sam. So [ Matthew ] and Sam have talked through OptiFlow Switch and Optiflow Trace, and we are really excited to change clinical practice and extend Optiflow into the anesthesia setting.

Welcome back. You've just seen some demonstrations of our surgical humidification and diffuser, the Optiflow Trace and also our Optiflow Switch.

Now you may have a few questions about these products. But in the next segment, there is a dedicated Q&A, where you can ask Winston and the rest of the team using the Slido application. As you can see on the screen now, there is a QR code and the event code, which you will need to use to ask questions.

Each Q&A session is going to have a dedicated Slido code. So the code for this next session, as you saw, was #FPHsurgical. And we're going to repeat that code again. There, you can see it. If you use the QR code, it's prepopulated and so will probably take you straight to Q&A.

Now while you're setting that up and the on-site attendees are finishing the show and tell, we do have another product to showcase from our OSA business. Take a look. Welcome, everyone. Now we're joined by Bhavi Ogra, who is the Clinical and Marketing Manager of the OSA business. She's here to talk about the Evora Full face mask, which is the newest mask from the OSA team.

Hi, Bhavi.

Hi. Thanks for having me today, guys. Yes, so I'm absolutely here to talk to you about the new Fisher & Paykel Evora Full -- compact full face mask. And I've got a short video to play. And I guess, that video is going to take you through a bit of the behind the scenes of how we came to develop this mask and also show the collaboration that we -- that our engineers have with patients and clinicians. And yes, I hope you really enjoy it. [Presentation]

Great video, Bhav. And as you see, that was a lovely back kind of insight into the development of the mask. And awesome examples of collaboration, which is what we've been hearing some themes about today. Obviously, a really important part of innovation is that collaboration. I see some similarities to the Visairo, which Laurence showed us earlier. To talk to that.

Yes, absolutely. So Laurence would have spoken to you earlier about the Visairo mask. And that is also a compact full face mask. It's got this floating seal. And that's a real common element between the two masks. With the Evora Full, we've also got the stability wings to allow for the seal to maintain its stability and not create leaks at higher pressures. And leaks are a real disturbance for patients. So we want them to have continuous therapy throughout the night without any discomfort, irritation into the eyes and actually pressure on the nose. So it's a nice common element of the two, but really in the OSA mask, amplifying the stability wings and making sure that they work in combination to create dynamic support and technology.

Perfect.

So the Evora is used at home and the Visairo is used in the hospital. These are pretty two different environments. How does one separate between the two?

Yes, you raised a really good point. And so Visairo in hospital, typically patients don't really have a say about what mask gets put on them. Whereas in the home environment, patients have a lot of choice. And so we want it -- we want the mask to be really inviting for the patient to want to use every night. And we want to make it as easy and simple for them to use on a night-to-night basis and really get the sleep that they deserve. So I guess, some of the things that are quite different from the Visairo mask and the Evora Full being in the home environment is that it's quite aesthetically pleasing, you've got the compactness of a full face mask. So traditionally, full face masks would be over the nose, but you've got that compact under the nose. You've got the blue kind of ring going around to denote that those are the head straps that stay on the top and also helps with orientation. You can imagine some of our patients, they're in home. They've got poor vision and dexterity and those kinds of ailments that come with getting older, I guess. So we just want to make it as easy as possible and simple for them to remember these key things on a night-to-night basis. And then I guess, what really sets it apart is this beautiful breathable fabric that we've got on the back. And this, you can imagine sleeping 8 hours a night with some warm air blowing on your face, you can get quite hot and bothered. So we want to make the back of the head not have too much head gear but allow for segments to be breathable and really make it comfortable for the patients to sleep and get that sleep that they deserve again.

That looks like my running shoes.

Totally. Yes, I mean, there are some really common material choices that are related to high performance and comfort.

And breathability, obviously.

Absolutely, yes.

Brilliant. I know you guys try out your masks. It's an important part of you guys making sure that we've got a great mask to trade out on patients. And I'm sure that was the same for this one. I think I've seen some of the data, it's really impressive on patient preference and comfort. Can you talk to some of that?

Yes. So I guess, that's a fun part about what we do. We always try and put the patient at the core of design. And every kind of iteration that the development team develop on masks, we want to put that on patients and really hear from the patients how this has impacted the comfort, the performance and the usability of this product on a night-to-night basis and in their own home environment, not in a lab that's very different to their normal natural sleeping environment. So patients are on that journey with us through that development cycle. And we've just had resounding feedback based on the performance, the comfort. That silicon is so fine and soft. And patients have really enjoyed that the pressure point has been moved from the top of the nose to somewhere that's unobstructive and allows them to have that freedom and sleeping basically in any position that they want to.

Yes. That's awesome. Well, thank you so much for coming today, Bhavi. It's an amazing-looking mask. And I'm sure it's basically another whole population of people who are going to benefit from this incredible innovation that we do here at F&P.

Thank you so much.

Thank you. Thank you for having me.

You're welcome.

Welcome back. The on-site audience are still going about their show and tell. But as promised earlier, we have a video of Jonti doing our Daniell Building tour. So let's take a look at the first part of that.

Enjoy. [Presentation]

That was the first installment. We'll have more of that for you later. I have to say I'm actually [indiscernible] of the Daniell Building. It's primo, love it, amazing. Now so we're going to be starting the Q&A shortly. So what we're going to do is we're going to move you back to the room. But I do just want to remind you to get those questions in at Slido. You can see on the screen the QR code, scan that and it will take you to the question area for this segment. There will be separate ones for later segments. So this is the #FPHsurgical code that you need to use. So we're going to move you over to the screen now and we'll see you shortly.

So I think Hayden there is going to be -- as he puts his hand up for my questions, I wouldn't mind if the team comes up and supports me, well, some of it. I'm sure there will be some challenging questions. And happy to answer them.

Can you maybe talk a bit about prevalence of each of the independent use cases? So for example, in bronchoscopy, how common are they? How common is a desaturation event and therefore the number of times a consumable might be required?

Sure. So in terms of -- obviously, I'll talk for the surgical first, so laparotomies. Hypothermia, you're talking a patient getting hypothermic. Even with the current standard of care, you're looking at 40% of patients going under these procedures still can get hypothermic. In terms of the -- I'm assuming what Chris has said, so I'm making some assumptions, so might have talked about some of the surgical site infections. Data shows that still 10% of patients will get a deep tissue surgical site infection. And then that's the likes, the cost of the health care system in the U.S., not just laparotomies, but in total from surgery, is a $10 billion health care -- impact to the health care system. So in terms of -- so some of the other prevalence, some of the data off the top of my head, it could be somewhere between -- it's quite a range, depending on the types of procedures. So I think Sam talked through bronchoscopy, but there's colonoscopies, cardiology and some of it is quite a range, gastroenterology. It's quite a range in their presentation slide, but anywhere between 30% to 70%, I believe, off the top of my head, where a patient can have a desaturation. And then in terms of challenges with intubations, I believe 1 in 1,500, or somewhere around that range, can certainly have a difficulty with intubation.

I wonder if you could talk through the approval profile of the various new products that you've got and by geography even and whether they're just being approved for specific surgeries at the moment. Or is it open label?

Sure. Cool. Again, so this new diffuser, so it was just released late last year, and that is currently available in New Zealand, Australia and the U.K. and the team is working through the regulatory process for the other countries. In terms of Trace, that is already available largely around the world, so we're already directly selling in 20 countries. And that's available including the majority of U.K., Europe, Australia, New Zealand, U.S. And then in terms of Switch, same countries, except it's currently at the early phase of 510(k) application. So they can take anywhere, maybe 12, 24 months to get there.

And there's a question from online from David Low from JPMorgan. What are the approximate revenues from sales of surgical humidification devices?

In terms of -- I'm not specifically talking about, we -- I talk about that with regards to the overall hospital new apps, but it is early phase for this part of the business. But feedback has been very positive.

On statistics, what proportion of, I guess, some of the anesthetic procedures that have to -- or the surgeries that have to be rescheduled because of low oxygen saturation?

I don't know that off the top of my head, personally. I don't know if Matthew or Sam, you have that in those numbers?

Yes, it's a good question. So you're referring to patients undergoing sedation and they need to reschedule, endure general anesthetic, for example, because they are high risk. It depends a lot on the type of -- so again, it's those things that Sam mentioned earlier in terms of patient risk, the procedure risk and the anesthetic risk. And it varies a lot by different procedures. So for example, if they were doing something called an ERCP, which is quite a complex procedure, the rate of those progressing to general anesthesia would be a lot higher than it would be for perhaps a standard screening procedure. So it's difficult to give a number for all procedures. But it's not an uncommon thing to have happened.

Sorry, just on the Trace one, I think, over there, so are you sort of replacing your own product in terms of -- so a normal cannula would be there, now an updated cannula would be, so one product would replace the other? Is that correct?

Yes. So I mentioned, we've been really focused on the last 10 years and making good traction across it. A lot of the learning has been with another Optiflow cannula. And as we've learned about the anesthesia practice, the patient, the complications, that's where we recognize the benefits around these. And as we develop these technologies with the collapsing side to enable the switching between Optiflow and the anesthesia face mask as well as the CO2 side for the Trace, we've obviously built up a strong IP around that as well.

So at the moment, is the standard of care to have a nasal cannula?

Our standard of care today would be -- sorry, again different procedures -- only referring to...

Yes.

Sorry. Yes, only the traditional anesthesia face mask. So that process potentially Matthew and I talked through originally, that will be the standard of care today.

What would be the indicative cost per patient for the consumables, for all three of them?

In terms of the surgical product, obviously in terms of -- it's about $130, so constant currency in New Zealand. And then what that can sell you for anesthesia, you're looking about $50 per patient, blended cost. Hayden?

We've got a question from online from anonymous. How many procedures per year acquiring anesthetics would benefit from FPH products?

Yes. So we've been learning about this and trying to understand it. I think what Lewis mentioned potentially yesterday and today, it's very similar to the general respiratory support total addressable market. So we are talking $50 million here, a good benefit from Optiflow.

With your new technologies, particularly these ones, how does the adoption usually flow? Does it come through like one department and one hospital? Is it rolled out through a whole hospital simultaneously? How does it typically work?

I think it varies quite a bit. In some cases, at early phases where we building strong relationships with key opinion leaders, it can be done by one as stronger clinical evidence, which I've talked about, which is very strong, more and more groups will certainly show interest. I know how our sales force, which is doing a really great job presenting to anesthetic departments, getting interest as a whole and then doing evaluations and rollouts through the hospital department. So it varies quite a bit. But it definitely includes large groups as well as individuals as well.

One from online. With your surgical humidification products, does the humidified air fill the wound -- with the humidified air filling the wound, does that reduce visibility for the surgeon?

All right. So partly, I think the question is also through the demonstration, where we helped you visualize the wound filling and the importance of completing that to have the heat transfer. That visualization we showed isn't what actually happens during surgery. So it is -- you don't see anything during surgery, so it doesn't obstruct the surgery at all. That would have failed the challenge if that's what it did.

What's the design IP or the patent protection? Can someone copy you at a different shape? Or what's the lead time for [indiscernible]?

Yes. So with anything, we follow really strong, rigorous IP protection area. I think it really starts with what Andrew talked about this morning with unmet and unarticulated needs. So we have the opportunity to really innovate and come up with novel things. And that really puts in a strong position for IP. So what I can say certainly around the three products we talked about today, really strong IP protection across all of them.

We have another one from online. Are there competing products with Switch and Trace and the surgical diffuser?

Sorry?

Are there competing products for Switch and Trace and the surgical diffuser?

No. I think that's all the time we have for the Q&As. If you have more questions, there's certainly the opportunity the afternoon, I think, around 2:30. Thank you very much, and also thanks for the team for supporting us and communicating the great products that we have. And we'll talk to you again. Thank you.

Wow. There was some good questions.

Great questions from the online crew. Good performance.

So that brings us to the end of our morning agenda. And of course, it's lunch time, so enjoy your break. And we'll see you back at 12:45.

And I think we're going to have some analysts with Marcus, aren't we?

Yes, yes, analysts. Marcus is the...

And Marcus Driller is going to come in and do some interviews for you, so please be back at 12:45 for that. [Break]

Welcome back, everyone. Hope you got a good break. What did you have for lunch, Fi?

Wow, Harris. [indiscernible] I went for sushi, and sushi [indiscernible] a little something. They were amazing. How about you?

I actually managed to get a profiterole before they were all taken...

Yes. I saw the fight for those. Yes. Nice.

Anyway. Now we have someone [indiscernible].

Yes. We have someone you know, in fact. So Marcus Driller, our VP of Corporate. We're going to give him the reins for the next segment and he's got some interviews with some analysts for you. So over to you, Marcus.

Thanks very much, Fi and Harris. Very pleased to be here with Dan Hurren. Dan is one of the sell-side analysts who provide research coverage rights, some very interesting pieces of research on Fisher & Paykel & Healthcare. Dan, grand to have you here in New Zealand. You've come over from Singapore and Australia.

More Australia.

More Australia. Okay. So one of the people who have come the farthest today. So great to have you here.

Dan, just interested to get your views on the company, Fisher & Paykel Healthcare. What do you see as some of the short-term challenges and opportunities and then, into the long term as well, the challenges and opportunities for Fisher & Paykel Healthcare?

Sure. Look, I think in the short term -- I'm sorry, but you're just not very unique at all. You've got the same problems as everyone else, and they're largely chips, components, chips, freight, staff, trying to get enough staff to sort of boost that sales force you're talking about yesterday. But I guess, where you differ is just that surplus of installed base that you have at the moment, which comes from the COVID, of course -- comes from the COVID period, where you had just that massive injection of hardware into the market and working through that bolus of equipment and getting employed over the next couple of years is, I think, the real challenge. But of course, that's the challenge today, but it flips to a significant benefit if you can actually get the sales force in there and get that utilization up there. So I mean, my mission in life at the moment is try and figure out when that inflection point occurs, when it's much a bigger problem and becomes that benefit.

Yes, yes. You've been up in the U.S. recently, I know, sort of talking to our customer in the OSA space, but also trying to understand what's going on in the industry. Any thoughts on what's happening in the medical device industry in general up in North America?

Sure. Yes. I was lucky. I just got to spend 3 months there last year. I had another trip back recently to attend MedTrade, one of the big conferences up there, only for home health care. But look, I think it's not dramatic to call it a bit chaotic at the moment. I mean, hospitals are exhausted. They're a bit broke. They're trying to find their way out of the end of COVID. And you have staffing issues, all those sorts of things. So I think one of the challenges that you have and your sales force have is just trying to navigate that really kind of -- not broken, but have to bend a hospital system. Now of course, your technology, you claim, has the way through that.

That's right.

So -- and I think that's going to be the challenge for us, getting the sales force physically into those hospitals and to the right people.

Yes, yes. Great. Maybe just one last question from you, Dan. Really appreciate you joining us. What are you -- you've spent the morning, I think, when looked at the anesthesia and surgical rotation. But any thoughts that you have from this morning? Anything new that you've learnt?

Look, okay, it's certainly great seeing new products and always good to see that. But I guess, the other thing is that it's what we expect. I mean, you're a company that -- you set the target for a double-digit revenue growth in the future. So we'd expect nothing less. We must see this stuff every time. So I've got as far to say that if you don't have one of these and you don't have a bunch of new products, that's the time when we start to panic.

No pressure, F&P team, yes, every year.

So look, I think it's exactly what we expect. It's great to see them -- it's great to see the products and actually understand it and also just have a look at the campus as well. It's -- I mean, if you've got 10 years, it's pretty spectacular. So it's interesting to see that.

Yes. Thanks. Dan. Look, really appreciate you joining us today. Have a safe trip home when you get back to Singapore. But yes, thank you. So thank you very much, Dan. Our second interview is going to be with Adrian Allbon. Adrian is from Jarden. So welcome Adrian on. Adrian, thank you very much. You haven't come quite as far today, Adrian, but you've come from somewhere in Auckland.

Yes. That's right. By [indiscernible] commercial base of the [indiscernible].

Great. So Adrian is another of our analyst, works for Jarden, based here in New Zealand. Adrian, just interested in your thoughts, similar question that we had for Dan, around the short-term opportunities, challenges for Fisher & Paykel Healthcare versus the long term. How do you see the business?

Yes. Look, I mean, it's clearly a long-term company. And I think most people want to appreciate it as a long-term company. So it was nice within the result, I guess, to have some sort of forward-looking stuff off what has been a pretty -- but I guess, for those companies -- like an opportunity with the COVID disruption over the last 2 years. And obviously, also to kind of appreciate what sort of new products are about to be launched and also, like even if you've got a home care, what new products are already in the market and starting to get some traction. So I think that was really good. And often, we kind of lose sight of that because being in the markets all the time, we can get trapped in the very short term, which is difficult for this company to provide any great degree of...

At the moment, yes.

At the moment, that's right.

Yes. So you've come -- I think you've been on the AIRVO rotation this morning, but I'm actually quite lacking this opportunity to ask the analyst questions. Usually, Adrian is trying to [indiscernible] it's quite weird, isn't it? We are in a reverse situation.

Reverse service questions.

Yes. I think on the AIRVO 3 rotations this morning, anything that you've picked up on your conversations or anything new or the way that you think about the business?

Just, I mean, I think AIRVO 3, I mean, taking us [indiscernible] today, and I think that product, we would probably expect, there's an evolution of that therapy for a company like Fisher & Paykel Healthcare. But what's quite nice to sort of see come to life by, I guess, being here for 30 minutes and experiencing the product in various different forms is just the depth of knowledge that the company has. particularly end market across a range of -- whether you're the patient, whether you're the clinician, whether you're the hospital, just the different feedback that you've taken in over years kind of incorporated that into a platform that you can now scale as your next evolution. I guess, COVID sort of probably marked up the timing of that in some respects. But nonetheless...

It's been a challenge to keep going through.

Yes.

The team has done a great job. There have been challenges, you're right, yes.

So that would probably be the main point from my [ expectation ].

Yes. And then in terms of as you look out over the next few years, is -- anything in particular that you're looking for from us as a company? What are the milestones or the signposts that you look at for our continued trajectory?

Well, look, I mean, I think, without a doubt, like everyone, we'll be looking for what is a brilliant business model. We have an installed base and a whole set of consumables revenues that took over for many, many years. We'll be looking for the utilization of that installed base across a range of therapies and how powerful actually the clinical evidence and first-mover advantage. You've actually gone in that space and it translates. And I guess, to be even more kind of specific, through the sales reps [ visiting ] the other hospitals really make a difference on access. So that's probably on that side. I think anesthesia is an interesting opportunity. Like it's something you've probably been doing in some small pockets. You can advertise of it. But even now, it feels like a natural complement for some of the high flow staff. And then on the home care, I mean, it's sort of been the poor cousin for the last couple of years. So -- and there's probably other thing and the other one is sort of normalizing.

Yes, yes. From Jarden, Adrian. Adrian, it's been great having you. Yes. Thank you very much. I appreciate you taking the time.

Cool.

Thanks, mate. And I'll grab the microphone from you, if that's okay. And we've got our last visitor, Stephen Ridgewell. Stephen, how are you? Good. I'll give you that. Stephen Ridgewell and I have been doing this now for, what, 10 years. Actually, I look back. I think it's been 10 years since you and I have been talking about the company. So Stephen is with Craigs Investment Partners. Really appreciate you coming in, Stephen. Yes.

Yes. No. It's -- look, it's been a long time. I think of first stock I picked up as a junior analyst was doing a piece of work on Fisher & Paykel, and it was [indiscernible] business back then with the focus. So 15 years has gone pretty quickly actually, and that's been great to see the company grow over that period of time.

Yes. That's right. I guess, similar question that I asked for Dan and Adrian, but the things that you see in the short term and the long term for Fisher & Paykel Healthcare. What are some of those opportunities and challenges as well for the company?

Yes. Look, I think short term, probably I quote what Adrian was saying, that there's the conversion of the installed base. I think it was touched on this morning. And I think from a financial market perspective that the timing is uncertain, I think [indiscernible] for the company as well. But we are actually looking for proof points of that, and we're engaging the customers and trying to get a sense of how long it will take. And so just trying to get -- calibrate that is challenging. And then you've got a company with a 40-year, 50-year time horizon that is trying to look through those debt volatility in kind of envisioning for the future. So there's -- it's a little bit choppy at the moment. But certainly, I think, today, we have just reiterated the long-term thinking of the business, in the long time frames for success in the market. And then just to cast a line back, I do remember when I first started looking at F&P, there were 5 or 6 different therapies, which were in the model, which -- all of which could be successful. And no one was quite sure which one was going to work. And as it turned out, high flow, NIV was somewhat successful, but high flow has obviously been hugely successful. [indiscernible] and we're seeing different products gone through that actually [indiscernible] for the company going forward.

Yes, yes. Well, you've been out here a number of times. Is there any -- yes, is there anything that sort of struck you or that you've seen as new or you've -- you've picked something up as you're here this morning?

Yes, yes. I mean, I think the growth of the company, I mean, it's -- there's a lot of construction going on. The pace of adding new buildings has certainly picked up since the early days, Marcus. But I think, as well, just in terms of the -- what we talked about this morning, the AIRVO 3, I think, is a very impressive product. And you can see the clinical use case for that. It's very, very quickly to [indiscernible] And that's going to be a very interesting product to follow. It's one of the bigger leaps, I think, I've seen for a while in terms of new products coming out. So that's certainly one of the future and one we might hear a little bit more [indiscernible] about -- of new products.

Anesthesia and surgical, I think you're on that rotation. Now tell me, it's quite -- I'm actually really liking this because it's usually the other way. But now are you up for an award tonight?

No, no.

No. Neither are we. We have the big finance awards here in New Zealand. Stephen has been a regular winner. Fisher & Paykel & Healthcare obviously hasn't helped you out this year. But Stephen, really want to thank you for taking the time to come and speak with us and our audience all around the world. And all of this, thank you very much.

Pleasure. Thanks, Marcus. Cheers.

Thanks. And now I think we'll hand back to your hosts, Fi and Harris.

Thank you, Marcus, and I'm sure he really did enjoy sitting on the other side of the seats there, asking those questions of the analysts. What's up next, Harris?

So coming up next is our presentation from our AIRVO team hosted by Chris Crone, the General Manager, and Sam Frame, Marketing Manager. So let's take a look at the situation right now. I think they're preparing their studio. And yes, we'll see you after the presentation.

Hey, everyone. We brought you back here because it was just taking a little bit of time for the on-site audience just to get to that room, and we don't want to have you staring at the back end of the back room there. So I think we're going to play the second installment of the Daniell Building tour for you. And what do we have up next for the second installment?

I think it's the new Daniell Building, so actual building itself. So hopefully...

It's a new construction, isn't it?

Yes, yes. Sorry, sorry. The new...

Yes. The new construction, so you're going to...

We haven't named it yet, yes.

So we haven't named it yet. We don't know what it's called. So we'll head on over to that for you. And at the completion of that, we'll take you back to that room, and the team will be ready to tell you about the AIRVO. So enjoy. [Presentation]

Hello. Welcome, everyone. My name is Chris Crone. I'm the General Manager of the AIRVO Group. And to my left is Sam Frame, the Marketing Manager of the AIRVO Group. And also around the sides of the room, we've got some of our colleagues from the AIRVO team. So Sam and I going to say a few words. We're going to talk about some of the new features of Airvo 3, and then we'll have a 30-minute expo. And in the expo, we encourage you to go and visit the 5 stations we've got set up. You can talk to our colleagues. You can ask some questions. And you can have a bit of a play with the new features that we've got on the Airvo 3. So I'd like to begin by talking about the AIRVO 2. The AIRVO 2 has been a fantastic success for us. It's enabled us to treat millions of patients all around the world with Optiflow nasal high flow. And during this time, we've learned a lot more about how clinicians treat their patients and a lot more about how clinicians want to treat their patients. And every day we come to work, and it's our job to better understand the patient's journey, better understand the clinician journey. And from that, we identify problems that we can solve for our customers. And there's different kinds of problems. Sometimes, they're relatively clear from the outset. And we go and solve them, and we do it really well. And other times, there are problems which are a little bit more complicated. They require a bit of digging beneath the surface. And often, those are the ones that are more valuable for our customers when we solve them. So today, Sam and I are going to talk through some of the problems we've solved with the Airvo 3. And we're going to talk about how that enables us to treat more patients around the world, in more areas of the hospital and by more clinicians. So Optiflow as a therapy has often been a little bit tricky to move around the hospital. To deliver Optiflow, we need to deliver humidity to the patient. And to create humidity, we need to heat water. And heating water requires power, requires continuous power mostly from a wall, but often we've used battery solutions as well. These tend to be quite bulky and heavy. And these kinds of constraints have created doubts in the mind of clinicians. They've had to ask themselves, look, do I really want to put my patient on this therapy when I'm going to have to change it in 20 minutes, put them on cold dry oxygen in 20 minutes, when I send the patient down for an x-ray. So we've solved that issue with the Airvo 3. What we've done is add a battery to the Airvo 3. That's seamlessly integrated. It means that the patient -- sorry, that the clinician can pull the power cord out of the wall, and they can take their patient anywhere in the hospital and be assured that they're still getting that Optiflow nasal high flow all the while. So Sam's going to tell us what that means for treating more patients and more areas of the hospital.

Thanks very much, Chris. So yes, the integrated battery is a really exciting part of the product and a really exciting part of the project. And we think it's going to make a big difference for the implementation of the therapy and the effects of the therapy. And I guess, really, what it means is that, once a clinician makes that decision to institute Optiflow nasal high flow, that, that decision doesn't have to be unmade later. It doesn't have to be challenged later because of the circumstances. And it -- and basically, that continuous provision of the therapy free of interruption can occur no matter where the patient is or where they might have to go later. And a couple of ways to illustrate that is to [indiscernible] in a patient in the respiratory board, for example, and put him on Optiflow. Now that might be a patient who needs to be moved to another part of the hospital, the diagnostics area of the hospital for x-ray imaging, for example. The clinician who started the therapy or is managing the patient on the therapy doesn't need to worry about whether the patient needs to go or when they need to go and get an x-ray. They just go and get the x-ray. And they just continue to receive the therapy the entire way there, whether it be down in a corridor, an elevator or across another corridor and all the way back to the bed space. So that's a pretty obvious one. A slightly less obvious one is, when you think about patients who are preadmissions, so they haven't actually been admitted into the hospital, they haven't been allocated a bed space anywhere in the hospital yet. And they're sitting in -- for example, they might be sitting in emergency room. And at that point, some quite important decisions are made that will affect the rest of the patient's journey throughout the hospital. And we think that this -- the presence of the inbuilt battery is going to make the decision to implement Optiflow nasal high flow therapy at this early stage a much easier one to make and one that won't be impacted by whatever happens to the patient next. So you can start Optiflow therapy earlier and have the continuation of that therapy just -- remain all the way through the patient's admission journey and then beyond as well. So in other words, we think there are going to be areas of the hospital that would have otherwise been more difficult to start the therapy in, that will be much easier to make that decision. And there will be patients who will be receiving Optiflow therapy much earlier. We're going to -- we've set up a station here, which is manned by our colleagues, [ Lisa ] and [ Lilly ]. So they'll be able to show you what the integrated battery looks like, how the device interacts with it, and show you what happens when you pull the plug. Back to you, Chris.

Thanks, Sam. Now one of the big issues when we introduce new equipment into hospitals is that of the consumables. And by consumables, I mean, the tube and the chamber kits and also the patient interfaces for those particular patients. So hospitals really don't want to stuff more of these than they absolutely have to. There's a couple of issues. First of all, the space. There's only limited storage space in hospitals. There's another issue of training, and that's actually quite a big one. When we introduce new equipment into hospitals, often, it's a matter of in-servicing tens or hundreds of staff, that might be nurses, doctors, respiratory therapists, to make sure that they're aware of their equipment and they know exactly how to use it. And that can be quite burdensome, that whole training process. The third one is the patient safety issue. If you've got storage cupboards full of all different consumables, then, at some stage, the wrong one is going to get taken to the bedside. And there's implications for patient care there. So the problem we've solved with the Airvo 3 is that we can use the consumable sets from the AIRVO 2 on the Airvo 3 as well, and that's going to mean that hospitals, which are really set up to use the AIRVO 2 consumables, it's really going to be an easy process for them to start using the Airvo 3 as well. And not only have we kept the same sets, but with the Airvo 3, we've expanded the range of flows that we can deliver with those sets and also the ranges of interfaces that we can deliver with those same consumable sets. And Sam is going to talk us through what that means for more patients being treated around the hospital and more areas.

So if you think about what's happened over the last 10, 15 years, we've deployed a lot of Optiflow systems for use in hospitals, and a lot of those are AIRVO 2s. And we're bringing a whole new platform, purpose built from the ground up, which is the Airvo 3. And we're going to be introducing that to hospitals all over the world and asking them to implement them in the hospitals. And it's going to be -- it's going to take a lot of work from the hospitals and also from our folks. But one thing that's going to really help with that is the fact that we're not actually asking the hospitals to change everything. The tube and chamber sets, which -- when I say tube and chamber sets, I'm talking about the chamber, this manifold and this heated breathing tube. Those sets are already stocked in the hospitals that are using AIRVO 2, [indiscernible] and the entry in their operating systems are already there. So they can view all of them easily. There's already stock -- there's already -- they're already in shelves for them in the clinical areas and in the storage areas. And people already know how to interact with the parts when they open the bag. And most importantly, if we set up one of these kits on an AIRVO 2, you will already know how to set it up on the Airvo 3. So that component of the training is already inherent in the minds of those who are familiar with the AIRVO 2. Chris also spoke about the expansion of usage with other interfaces. And probably the best example of that is this little interface here, which is suitable for, say, a 1-week old or a 2-week old bronchiolitis baby that might come into [indiscernible] one of these at one time, and that will fit nicely on that patient's face. And that will now be compatible with Airvo 3. So that's an expansion. But the cool thing about that is this isn't new to the hospital. These are already available as well. So we've got a nice standardization effect there that's going to help us lower the barrier to expanding the fleet in terms of numbers, but also expanding where the fleet can go in the hospital and which patients it can be used on. So we're going to be able to demonstrate that to you. You can have a look at these little interfaces as well on the station over here with [ Blake ] and [ Cadien ]. And so they'll take you through that, and you can try fitting the consumables yourself. Back to you.

Thanks, Sam. Now hospitals are really busy places, and time is of the essence. And one of the processes which takes time in a hospital is out of reprocessing. By reprocessing, I mean in cleaning and disinfecting a unit, so that it could be moved from one patient and used them on a new patient. And with the AIRVO 2, we had the red disinfection tube. And how that worked was you put -- after a patient use, you put the red disinfection tube onto the AIRVO 2, and it would run for 55 minutes. And it would disinfect the internal elbow of the device it's a built-in elbow to the AIRVO 2, which contains temperature sensors and things like that. Now we've got a lot of good feedback on the red tube. That meant that clinicians could disinfect the device in all different areas of the hospital. They can put it in the storage cupboard. They can put it in the hallway. It was very handy for them. But the downside of the red tube was the 55-minute cycle it required for disinfection, and that means 55 minutes that the device couldn't be put on to a new patient. With Airvo 3, we've kept the option of the red tube. Some hospitals love it. Some hospitals want to keep using it. But we've also added a new feature, which is the removable elbow, which means that once one patient is finished on the Airvo 3, this could be taken out, sent down to the central reprocessing area. And then a brand new one can be taken out of its packaging, put straight back into the device, and a new patient can use it. And that's almost 0 time between patients there. So Sam's going to take us through what that means for broadening the use of Airvo 3 within the hospital.

Thank you, Christopher. So there's 2 ways to look at this. You could look at the hospitals who are already familiar with the AIRVO 2 and understand the process for making it available for the next patient or you can look at hospitals and maybe even just hospital areas that are not currently familiar. And we think they'll see this in different ways. Those who are already familiar with it are likely to just see this as a straight gain in workflow efficiency. So they just get more time basically. If you don't have to wait for the device to be reprocessed, because the reprocessing procedure comes down to something that's very, very close to 0, then you've got more uptime for the device to be treating patients. And if you've got more uptime for the device treating patients, you can treat more patients. So they'll see that as an improvement. And for those who are considering expanding the device to other areas with staff that aren't familiar with the machine or even hospitals that haven't used it before, they're going to see this as just a nice flexible way of -- or 2 flexible options for reprocessing the machine. And it will fit more flexibly, I guess, into the hospital systems that they've already got in place. So for example, they may want to only use the red tube process. They can use that locally. Anyone can do it. It's quite unique. The device is essentially disinfecting itself, and it can be done at the point of care. Or they may want to exclusively take the elbow out, send it to the central sterilization department, receive it back, and they fit into a system like so. Or they might want to just run both systems in parallel ad hoc and whichever process works some of the time will be the one that gets used. So there's good flexibility there. Both systems are very thoroughly independently tested and validated to achieve what they're supposed to achieve, which is disinfect [indiscernible] patients. So they've got 2 really nice options that they can trust. And we think that's going to help lower the barrier to expansion of the fleet and use of these devices, the use of Airvo 3 in more areas of the hospital, which will make it available for more patients. So to show you -- we can show what red tube means and what [indiscernible] means. [ Ashley ] and [ Olli ] are over here at this station. They'll be able to show you how easy it is to switch the elbow in and out and how we would set up the red tube process. Back to you, mate.

Thank you. So AIRVO 2 has found a great home in a number of different parts of the hospital, but [indiscernible] commission raised a concern about treating patients with Optiflow nasal high flow in parts of the hospital where, perhaps, there's less patient monitoring or perhaps there were lower levels of staff training. So with the Airvo 3, we've done our best to allay these concerns. And we have a fantastic new graphical user interface, which really allows Sydney clinicians to set therapy parameters within the Airvo 3 and all Airvo 3s that are going into the hospital in accordance with hospital policy. That means that clinicians are going to have the confidence that patients, wherever they're treated, no matter the day -- time of day or night, are going to have that therapy that's been prescribed by the hospital policy. And it also gives confidence to the clinicians at the bedside at 3 AM and a ward down the other end of the hospital that the care that they're giving to their patent is possible. Sam is going to talk us through what that means for AIRVO use within the hospital.

Thanks, Chris. So from a -- if you imagine being a clinician who is trying to figure out what's the best treatment for the patient in front of them, they've kind of got 2 things they have to balance up. Chris spoke about both of them there. You've got a human in front of you who needs to be treated, and they have individual needs. And the progression of their disease is having a special effect on them at this particular time, and their history is playing into that. And it all comes down to what you know about it. So that's all going to impact your decision-making. But then you've also got the other paradigm, which isn't -- it's not necessarily contradicting it, but it is a different paradigm, which is the fact that your peers and the hospital administration have developed a policy to govern care of the overall population, and that's based on evidence. Evidence is based on the effects seen in a population. So you've kind of got these 2 paradigms, the individual and the population, and those have to be held simultaneously in the mind of the clinician. So what our user -- sort of menu system does is it gives you that simultaneous ability to address both. So you can -- the clinician who's using it is presented, firstly, with, let's call it, a path of great convenience, where they can turn the device on. The initial settings that are displayed on the device are essentially the suggested settings. They can be set by hospital administrator to marry up to the policy that's been set out for that area of the hospital or that hospital in general. You look at those settings. And if you're in broad agreement with those, that's your starting point. You start the therapy. So that's a very rapid way to start a therapy that will be in line with the protocols and procedures at the hospital. Layered on top of that, you've got the other method, which is, at any time before the therapy starts or after the therapy has begun, the clinician can jump in and adjust those parameters based on what they know about this individual. So they can change the flow. They can change the temperature. They can change the FIO2. They can change the alarm settings on the -- on post oximetry reading. They can change all of that stuff, and they can do it at any time. So in that way, it kind of gives them the ability to practice both of those -- or have both of those paradigms impact the patient's care. And what that means is that the hospital administrators can have confidence that whatever is being practiced, it will be within the realms of the policy that they've created. And it gives the individual clinician confidence that they'll have the ability to operate inside a clinical window that allows them to do what they need to for the patient at the time. Again, these paradigms, in the way that our understanding of the paradigms and the way that we've designed the user interface, we think that's going to really create a nice on-ramp and a low barrier to adoption of these devices throughout the hospital. Now there's a lot in there, and this is a really nice way for us to show it to you. And we've got that set up at the station over here with [ Shing ] and [ Jose ]. And I'll be able to show you how the user interface works. They've also got a simulator there, which will give you a sense of how we're going to scale the training of this for all of the staff that we're going to need to teach over the years. Back to you, Chris.

Cool. Thanks, Sam. So one thing we're really good at, at Fisher & Paykel Healthcare is [indiscernible] one of the things we really think it's going to fundamentally change the way the care is delivered, thankfully in the delivery of oxygen. So oxygen is a drug, and it's often underdelivered or overdelivered. And clinical guidelines typically give ranges for a particular patient. So let's say you've got a group of patients, [indiscernible] range of [ 92 to 96 ] and what that means is that their blood oxygen saturation, their SpO2, could stay between 92 and 96 for ideal care. And then you might have other group of patients where that ideal range is actually a bit lower. It might be 88 to 92. But keeping the patients within those ranges can actually be quite a manual process. It's called titration. And what it involves is an oxygen -- sorry, it was a patient -- a clinician turning a dial on a wall, which changes the amount of oxygen that [indiscernible] the patient. And then the clinician is going to have to wait a couple of minutes and see what values appear in the patient's blood. The clinician might have to sweep that a couple more times and wait to see what happens until that patient ends up in that range, and that procedure might need to be replaced -- might need to be repeated another 4 hours later, another 8 hours later. And it can be quite burdensome just making sure that, that patient stays within that range. So we're really excited about the OptiO2 feature because it enables us to do automatic oxygen titration. The Airvo 3 can interface with pulse oximetry sensors, and that allows the Airvo 3 to know what's going on inside the patient's blood. The Airvo 3 has also got an oxygen valve, which can change the amount of oxygen that's being delivered to that patient. So the clinician can set up the ranges of the [indiscernible] and set up the ranges that they want in the patient's blood. And the Airvo 3 is just going to keep that patient within those desired ranges. We've done a lot of clinical work on this. We've done some great trials with the Medical Research Industry of New Zealand down in Wellington, and there have been really, really encouraging results. We think we're really going to have something, which is going to fundamentally change the way that oxygen is delivered around the world. And Sam is going to take us through how it means we can treat more patients, more areas of the hospital, more clinicians and also change the clinical practice.

Thank you, Chris. So obviously, we're talking about a particular vital sign, which is SpO2, the amount of oxygen attached to hemoglobin in the blood for the patient. And keeping all vital signs within a range that's appropriate for the patient is important everywhere in the hospital. But I just want to talk specifically about something -- or areas of the hospital, which we'll refer to as lower acuity areas of the hospital. And so just for the discussion, I'll just explain what I mean by that. A lower acuity area of the hospital could be defined as a place in the hospital where the ability to intervene with an emergency medicine or a critical -- emergency sort of critical care intervention is slower or more difficult to intervene with, I suppose. But also a place where the average distance between patients and the clinicians is longer or larger, and the number of walls between patients and clinicians is larger. So it's generally harder to observe patients, harder to monitor them, harder to intervene if they need it. And the reason I want to talk about this is because in these areas, the consequences of having someone -- having a patient who is unstable or becomes unstable over time is greater. And because the consequences are greater, it sparks more concern among the clinical community. So what we think OptiO2 is going to do is -- what it will do is have the ability to keep patients within their target range of SpO2 without continuous intervention from clinical staff. And that should help lower the barrier, the -- quell the concern about having the potential for an unstable patient in a low-acuity environment. So it will have an impact on clinical practice with high flow. It will have an impact on clinical practice with oxygen deployment. And it will have an impact on the areas of the hospital that hospital administration are happy for the devices to be used in. And on top of all of that complication, you've got the fact that we could stand here and suggest a band that an SpO2 target range that might be appropriate for one person right now today. But the knowledge in this area is changing all the time. So what is an appropriate band within the hospital protocols today might be a more narrow band or a wider band, or it might move up or down. And that could happen for different patients at different phases of their acuity. And it might be different for each different -- each of the hospital areas. So the ability for OptiO2 to take input from the clinician about how tight that band should be and where it is, is another area of flexibility that we think is going to really help. So we -- again, we're going to show you how this works. We've got an electronic finger there that we can use to simulate in-patient with [indiscernible] clinical needs and it will be able to tell you how the [indiscernible] to those needs. We'll also be able to show you how the device learns what the SpO2 of the patient will be and how we can adjust oxygen output to suit. And that's going to be with [ David ] and [ Angelica ] at the station just at the back of the room. And we'll move to that in a moment. But before we do, just we've kind of come to the end of the different technology sections that we were going to talk to you about. So just to summarize, I guess, we've got a long runway ahead of us in terms of bringing Optiflow to its full potential. And with Airvo 3, we think this new platform is really going to help. We've got a unique, very user-friendly collection of technologies in there, all developed here at Fisher & Paykel. And you can sort of get the sense of how you're going to -- together as a package, it's going to lower the barrier and create a nice on-ramp to use of the Airvo 3 in new areas of the hospital, manned by staffs, by clinicians that wouldn't have otherwise used it in the past, perhaps, and of course, populated by patients that may not have otherwise benefited from Optiflow. And so all together, you can kind of get a sense of why we're so excited about this platform and what it's going to mean for helping Optiflow reach its full potential in changing -- improving patient care and outcomes. So that sort of caps off the presentation. I'm going to throw you back to Chris for some instructions about what to do next. Cheers.

Cool. Thanks, Sam. Okay. So now we're going to move on to....

Thank you, Chris and Sam, for all of that insightful information about the Airvo 3, a truly awesome system that's -- but for me, I think a key takeout was how this device is going to be able to facilitate treatment of more patients in more areas of the hospital and by more clinicians. How about you, Harris?

Well, I really liked the fact that they used the closed loop OptiO2 technology. And not only it will provide the most optimum O2. It won't give you too little, too much, but just the right amount.

Just right. I like that, I like that. Now just like before, it's product show and tell time. So we can see in the live room that the audience is now dispersing to see these little product demos. And as previously, we've recorded these for you as well. So we're going to move to those. Please enjoy.

We've presented some of the key features of the Airvo 3 that will allow us to treat more patients in more areas of the hospital by more clinicians. I've invited some of the Airvo team to come down and give us a closer look at some of those features. Okay. Now we're going to move on to the integrated battery of the Airvo 3. And for that, we're going to talk to Shing. Shing, can you take us through how someone might move a patient on an AIRVO 2 right now?

Good question, Chris. Because the AIRVO 2 doesn't have an integrated battery, so the customers will have to source their own battery solution or probably an UPS. And more often than not, the battery they find can be a little bit bulky and heavy. And once this mounts along the stand, it could be a little bit hard to push around. And for those who can't find a battery, most likely, their patients will be transported on conventional oxygen therapy, which is called dry medical oxygen. And these patients will not see the full benefits of nasal high flow can provide.

Okay. And we have the Airvo 3 with an integrated battery. Can you take us through that?

Yes. Sure, Chris. So the Airvo 3 does have an integrated battery at a bag that is much smaller footprint compared to an external battery. And because it's integrated into the Airvo 3, so the Airvo 3 is able to tell whether battery is fully charged or not. And of course, overall, that has a much smaller footprint compared to a full Airvo 3 set up with a UPS. So that makes this whole setup a lot more maneuverable and easier to push around. We believe that patients will be able to continue to use the therapy during transfer. And they can even take the therapy with them wherever they go in the hospital.

Great. Can you give us some examples about where patients might be transferred from one place to the other within the hospital?

Good question. So for example, in the ED, patients having to be escalated into ICU or being de-escalated into the ward or, simply, they need to go to [ GC ] x-ray scan, or, let's say, they simply just want to get up, go for a walk.

Okay. Great. So this is really going to help clinicians to get their patients mobile and move around the hospital and give them a lot of confidence in doing so. Brilliant. Thank you very much, Shing. Cheers.

Thanks, Chris.

Okay. Now we're going to talk about the consumables for the Airvo 3 device. Cadien, we talked a lot about consumers. Can you explain the consumable kit that we use for the Airvo 3?

Yes. So I'll walk you through the setup. We've got exactly the same chamber as used on the AIRVO 2 that heats and humidifies the gases. And then we've got the air spiral tubing, and that continues heating the gas until it gets to the patient. And it works with [indiscernible].

That's fantastic. And what some of the advantages of having the [ consumable ] kit on the AIRVO 3 and the AIRVO 2?

It means that the hospital is trained up on the AIRVO 2, and the consumables used with that one is now retraining for the Airvo 3 because it's exactly the same consumables. Additionally, hospitals will be stocked with our consumables already. They don't need to have 2 different sets. [indiscernible]

That's fantastic. So if a hospital bought Airvo 3s for their Emergency Department, they could take a patient up on the Airvo 3 up to the AIRVO -- up to ward. And if they had a couple of AIRVO 2s, really, they're already stocked and ready to go to treat that patient further.

Exactly. They've got everything that they need there already. They just need to bring in the patient and set them up.

Fantastic. And can you take us through some of the new flow and interface features for the Airvo 3?

Yes. So the new Airvo 3 model can go up to [indiscernible] liters per minute, and that means that we can treat patients that have high therapy needs. Additionally, it goes down to 2 liters per a minute, and that can be used down to the NICUs and use the medium-sized cannula.

Okay. Fantastic. Thanks very much, Cadien. So if a hospital bought Airvo 3s for the emergency department, they could take a patient up on the Airvo 3, up to the -- up to a ward. And if they had a couple of AIRVO 2s, really, they're already stopped and ready to go to treat that patient further.

Exactly. They've got everything that they need there already. They just need to bring in the patient and set them up.

Fantastic. And can you take us through some of the new flow and interface features for the Airvo 3?

Yes. So new Airvo 3 model [indiscernible] lead us doing that. And that means that we can treat patients that have high therapy needs. Additionally, it goes down to 2 liters for a minute and that can be used down to the NICU and use the medium-size cannula.

Okay. Fantastic. Thanks very much, Lyndal. Okay. Now we're going to move on to the graphical user interface on the Airvo 3. And for that, we're going to talk to Jose. Jose, can you take us through the differences between the Airvo 3 and the AIRVO 2 displays?

Yes, absolutely, Chris. So the main difference is upfront that you'll see between the AIRVO 2 and the Airvo 3 is that the Airvo 3 has a larger touchscreen display with on-screen controls. And it also has a new battery. So the larger screen has allowed us to design the user interface in a way that helps facilitate user workflows and actions to make it more accretive and this in turn helps it to be more accessible to a wider range of users.

Right. And one of those workflows we've heard about in the past has been trying to control the flows that are set on the AIRVO in particular parts of the hospital. So let's say, I was a clinician and I wanted to limit the flow in a particular area of the hospital from 20 to 40 liters per minute. Can you show us how we might do that on the Airvo 3?

Yes, absolutely, Chris. So the Airvo 3 allows us to precisely set the settings, so we can set up the device in a way that does help it to follow hospital's policy. So let's just double check what the settings are currently. And as you can see, it is between 2 and 70 right now, and we wanted to change it to -- between 20 and 40 because that's what the hospital policy says. So we'll go down to the menu. We'll jump into system settings, which is behind a pin lock. We'll jump through that. We'll go to Optiflow settings. And as you can see, we've got the settings here for flow min and flow max. We'll jump in and will change the flow minimum to 20, we'll jump in and change the flow max to 40. And then is double check that those changes are applied. And as you can see now, we have a range of 20 and 40.

Fantastic. So that's going to give -- that's great. So that's going to give clinicians, a lot of confidence about putting the Airvo 3 into different areas of the hospital knowing that they've got precise control over what therapy is being delivered to their patients.

Absolutely.

Cool. Thanks very much, Jose.

Yes. Thanks, Chris.

Okay. Now we're going to talk about reprocessing, which is making the device ready for the next patient. And for that, we're going to talk to Oli, how is it going Oli?

Good.

Good. Can you take us through the current disinfection process on the AIRVO 2?

Yes, sure. So what we've got is this red disinfection shed. So basically, what you do after you finish treating a patient, you take your device, you set it up with this tube, and you run it for about an hour, and that will go through your full disinfection cycle.

Okay. And I see it can be used on the Airvo 3 as well, but we've got the new feature, the removable elbow. Can you take us through that?

Yes. So we've set the Airvo 3 up to use the same system that is already in place. But in addition to that, we've actually identified how to improve this. So what we've done is we've set this up so you can actually remove the one contaminated part of the device, which is your outlay elbow. So this is actually the only part of the -- air part you need to clean. So what you can do is you can take your contaminated part out, you can take a new fresh clean one, you can put it back into your device and your device is ready to go, ready to use on another patient.

That's great. And that's going to fit in with a whole lot of different hospital policies, people who prefer to use the Airvo 2 or some folks who prefer to use the washer disinfector, what other benefits do you see about using the removable elbow?

Yes. So this basically removes the amount of time required to treat a patient. So with an AIRVO 2, it's about an hour of our device to be disinfected before you can actually use it to treat another patient. If you're using this removable outlet elbow, it's basically an instant swap. So instead of having to have your device away not being used, you can use this straight away.

Great. And that's going to encourage clinicians to get their patients on the Airvo 3 a little bit quicker. It's fantastic. Thanks, Oli. Okay. Now we're going to go through OptiO2, which is one of the new oxygen control mechanisms on the Airvo 3. And for that, we're going to talk to Angelica. How is it going Angelica.

How are you doing, Chris?

So can you take us through some of the features on the Airvo 3 that enable this OptiO2 mechanism?

Sure. So here, we have Airvo 3... [Technical Difficulty] add a pulse oximeter and put high-pressure oxygen, [indiscernible], the device can use blood oxygen level from the patient to determine what oxygen mix they need to deliver, of course, within the limit set by clinical staff.

Great. And how does that differ from the standard [indiscernible] therapy?

Standard [indiscernible] therapy, clinicians have to set the oxygen mix and then adjust it manually capacity as the patient is oxygen levels may impact, so that patients may get too little or too much oxygen for their needs. The OptiO2 come back to this by responsively and efficiently delivering oxygen as required by the patient.

Great. And there's been a lot of clinical work going into this. Can you talk us through some of that?

Yes, sure. We have partnered with Medical Research Institute of New Zealand at Wellington Regional Hospital and clinical staff across New Zealand to test the performance of oxygen control as well as the usability of the graphical user interface with OptiO2.

Fantastic. And what problems are we solving here for patients and clinicians?

For patients, they'll stay within their target blood oxygen levels for longer and clinical staff can have the confidence that no matter what area of the hospital their patients are in, they may know that the patient is getting what they need.

Fantastic. Thanks very much.

While I hope you guys are impressed with our new arrow. As you can see, the innovation doesn't stop. We're always looking to improve. The onside attendees are still working our way around through their show and tell and [indiscernible] have the Q&A session side. And we'll provide the slide to when it's the right time. But what's next?

Yes. This next video, it's installment 3. That's called [indiscernible]. So let's see what that's all about.

I'm [indiscernible], what's this carving going on then [indiscernible]

Yes, this is a carving of a lease, and it was actually carved by one of our employees, and it was gifted to the building when we opened the Daniell Building a couple of years ago. It's called [indiscernible]. And basically, the carving pace tribute to all of our Fisher & Paykel Healthcare employees. Just as a lead supports trees in their role of being the lung. Our people breathe life into the essence of the business, [indiscernible] life and care to people and the world over. And I guess, ultimately, it sort of represents that together, we're all one. So it's a really special piece of art that we have here on site because it was not only is it beautiful, but it was created by one of our own team and is here, [ Melissa Barnholt ]. So really, really need to have little pieces of our employees contributing all over the company.

That is so beautiful, beautiful industrial design, it's what that is.

There you have it. That was [indiscernible], beautiful [indiscernible]. So like before, we now have the dedicated Q&A section for our AIRVO team. So it looks like they're almost ready to kick that off. Reminder about Slido. This is a different code. So please scan that QR code that you see now. The event code is #fphairvo. The QR code should take you there automatically as it's prepopulated. So get those questions into Slido, and we'll take you across to that room now.

Thanks, everybody. Now as an opportunity to ask a few questions of Chris and I, so if we could ask you to terminate your conversation and head back over this way, it would be great.

Thank you.

Okay. We've got a couple of wondering microphones around the crowd. So if you've got a question, just put your hand up and the mic will come to you. Here we go. I'll pass that to. Yes. Yes. So it will be -- we'll make this available at a premium. And I think that what you mean cost price? Yes. Certainly we'll be making it available at a premium. It will be proportional to the value increase. We think they know that's significant. So probably the best I read, I can give you on that is a significant premium. I think if you ask the question again in the next session, those will tell you something like 2 or 3 times.

Yes. We've got one question from online. The the Airvo 3 battery allows you to be mobile, but what about the connection to oxygen at the wall?

Yes, I can take that. So the Airvo 3 at and trains air from the room and that gets filtered and passed to the patient when the patient needs oxygen, then they'll have a bottle. So it may not be visible to those at home, but there's an oxygen bottle holder that you can see in front of you there. And oxygen bottle we'll just go on to that, and that's plumbed into the AIRVO. So -- and we have a little valve adapter assembly. So when the auction is pulled out of the wall, the bottle will take over and you can move your patient straight away.

Can I also add to that? I know you said -- I think you meant oxygen, but you also said here. So just in case there's any confusion over that both devices, AIRVO 2 and Airvo 3 have the primary flow sources and power inside the machine. So that's drawing in room air all the time. So air is a required input, but it's being drawn in from the room. And so for folks who tried Optiflow over here earlier, we were able to give you essentially Optiflow respiratory support without supplemental oxygen, supplemental oxygen is required for many patients, and that's what comes from the bottle. But there is air as well. Think about it that way, room air is being used as the primary source.

Yes. Just wondering what the Airvo 3 means for myAIRVO. And is there a similar upgrade to that device or any changes expected?

Well, that's probably another good question for the next session. I think I probably can't say much more than that, Marcus, would you agree?

It's a good suggestion.

I just know that the time frame between the AIRVO units and also, what happens to the sales induction of the AIRVO 2 with the introduction of Airvo 3?

Great. Thanks. Well, the AIRVO 2 has been great for us. It's a great product. A lot of people are still very interested in. So we've got absolutely no plans to ramp down the AIRVO 2. We see the AIRVO 2 and Airvo 3 working [indiscernible] hospitals, and we made that our sales team will be selling both at the same time.

Another question from online. With the Airvo 3, how long does the battery last for? And what is the battery lifetime?

Okay. So the run time on a single cycle, so the time between pulling it out of wall and the battery running completely flat. That depends on the settings of the device, but let's say you're running it at full noise. It's 37 degrees, you're running it at 60 liters per minute, for example. It will give you about 40 minutes. And at that point, it will actually go into a lower sort of power mode. It will give you another -- about another 40 minutes with a reduced humidity amount. So we think that's plenty of time to get to where you're going to and get back or get from emergency room to -- through the admission process. So that's the first part of the question. Second part of the question is how long would the battery live for? And the answer there is it will be 300 full cycles or 600 half cycles or 1,200 quarter cycles. So each time, if the battery is depleted by only 50%, that's not counted as a cycle, that's half a cycle. So think of it as 300 cycles. And it will also have a notification that will come up every 2 years that will indicate to the user that they should consider replacing it.

We have another question from online. Is the Airvo 3 U.S. approved? If not, when do you anticipate the launch?

So to sell medical devices into the U.S., you have to go through the 510(k) process, which is an FDA process. And we will be crashing out country plans over time. We don't have any distinct dates, which we could say about when it will be available in the U.S.

I just going to ask, so 3x the price with a couple of extra features. Is this being marketed to a different part of the hospital? Or are you going for exactly the same market at 3,000 price?

So we -- as we're saying earlier, there's a big runway with this. So the number of different parts of the hospital that could be accessed by Airvo 3 to provide Optiflow is big. There are a lot of new areas. Yes, we think so. Yes. We think it will unlock areas that were potentially unreachable by Airvo 2 for sure. Yes. So it's sort of -- it's the same market, but it's probably a greater number of parts of the same market.

Okay. We've got time for one more question.

If you look at the flow rate of the 60 for the AIRVO 2 and the 70 for the Airvo 3, what does that mean in terms of, I guess, patient size or potential increase in the market size as a result?

Yes. Yes. Good question. So you think the number of patients that could benefit from Optiflow at 60 versus Optiflow 70 is probably the same. What happens between 60 and 70 is kind of yet to be discovered. If you look at the body of evidence for Optiflow usage on patients requiring respiratory support in hospitals, which is the market we're talking about, there isn't anything really looking at flow rates above 60 yet. Having said that, most of it used Fisher & Paykel equipment devices like AIRVO 2. So the way to think about that is it's an expansion of the clinical window. And we'll have to see once Airvo 3 make their way into clinical research and go into protocols for studies that actually use flows above 60 liters per minute what that actual value is. So it's kind of the best read I can give you on that, probably doesn't change it. It might help tease out what flows above 60 are useful for but that's kind of yet to be seen. We're opening the clinical window first and then see what effect it has.

Great. Thanks, everyone, for your questions. We're going to move across now to the room we were in all earlier, and that's we'll have the bigger Q&A session with the rest of the team. Thanks very much.

And that is it of our product presentations. As you saw there, the audience is moving to the main room for the final closing. But we do have time for another video. And I believe this video is how [indiscernible] building.

Good. So this looks really long, what's going on with this long hallway. I'll let -- the cardel is here is something that a lot of people are quite amazed they first come in. So these ones are actually 250 meters long from...

250. I can do it about 10 seconds.

Yes, look, it's a massive piece. One of the things most people are amazed with here is the scale of all of the buildings. But it's a really positive thing. It's just reflective of how big the organization is in the growth and all the people that are working here now with that go on.

Go all the way to the end is a bit longer. Yes, 250 is quite long.

And you're not even walking.

No, no, I cannot walk that bit.

What's behind the store. Okay. We're at New Zealand's main export center NZ 1. Let's go in. All right. All right. So we're down here at NZ1. This is the primary export center for New Zealand. It was 10,000 square meters. So that's a huge distribution center and it does everything. This is where all the wonderful products get moved out around the world. So you're going to hear behind me, you're going to hear sirens, you're going to hear take machines. You're going to hear labelers people are working here. We pump out a huge volume of products every week. We can see a lot of our products are really small, but they need to be extremely carefully intent all around the world. So we send out thousands of cubic meters of product every week, all over the world to over 126 in destination countries and we've been doing that throughout the last couple of years without any kind of value in price to our customers everywhere. So let's take a pan around and have a look. So what you can see is the main outbound export area, teams of packing products, getting ready for an air freight shipment. Behind up in the racks here, you can see some products with security tapes on the top, those are airfreight shipments that are now. [indiscernible] security take is to make sure that they don't get in the period. And then you can see all the racks have beautiful [indiscernible] products, what we're doing and they've very narrow all racks. So the [indiscernible] back how focus that we use to code a [indiscernible] machine so that people go up with them right to the very top story. And then what you've seen just in front of you here is the customer specific labeling area. So this is making to put all the appropriate labeling and registrations of the product before they sent out around the world.

All right. Thank you, Jonty.

All right. Amazing. I've actually never been here, but -- so it's good.

Sure. It's a pretty new part of the business. And again, it's that same principle around evolution and not revolution. What you see behind you and grow out the pictures that we just showed you was largely designed by our employees. So we don't bring consultants in to tell us how and design our spaces. We create the spaces and the people that are working in them to design how they want to use them. And so all of the floor layout, all the pattern layout done by the people that are doing the job. And it's a pretty special part of, I think, why we've been so successful here in the export distribution center.

And that's what you call innovation. Is that correct?

Yes.

You know that hallway was actually -- I didn't make it all the way to I was actually puffing.

250 meters here.

Yes. So the guests are still making the way to the main room, which we will host the last and final Q&A session for the full panel. The Slido code there we go, is FPH panel, #fphpanel, and we encourage you to get involved in this last discussion so that you can get your questions answered.

Yes, it's going to be a great discussion. So get those questions in. And well, here we are, Harris, we are coming to now the close of the day. And so this is actually the last you're going to see us. So look, on behalf of both Harris and myself, we wanted to just extend a really sincere thank you for your online attendance and your attention today. We're now going to pass you over to that live room for the official closeout and at last panel Q&A. So from us, happy day.

Thank you, everyone. I hope you enjoyed the 2 breakout sessions we ran today. Some really exciting products, Airvo 3 with the new battery and OptiO2 technology is really going to allow us to treat a lot more patients and a lot earlier in their cycle as well. So that's really, really exciting. And then with anesthesia and surgical, the surgical diffuser, going to be some brilliant patient innovations there. And also the Optiflow switch and Optiflow will really allow us to sort of push that Optiflow technology into more areas of the hospital. So it's incredibly exciting.

Panel session, we will be taking questions from everyone in the room. So just raise your hand, and we'll get a microphone to you. And don't worry for those online, we will also be taking questions from you, too.

So I guess we'll get everyone up on stage and sitting on the couch. So I'd like to invite Lewis, Lyndal, Andrew, Winston, Chris and Sam Frame, our Marketing Manager from AIRVO Optiflow, who I haven't introduced yet, up and onto the stage, please.

So I would like to encourage you to take advantage of the team we have here. Get the answer straight for any questions you may have. This is your chance or online as well.

Dan Hurren from MST. I was just going to ask, from what we can tell, products in the surgical space have been a pretty slow growing for Fisher & Paykel over the last 10-plus years. First of all, is that fair? And secondly, will it change now that we've got more products going into that surgical space?

Yes. No, I totally agree is -- from my perspective, it's certainly slower than the site. And if you ask the team, they probably know I'm quite dissatisfied with that. But we've learned some really good lessons from that. And it's really understanding what is the problem you're trying to solve, developing the right product, which the customer is going to value and obviously addressing the problem that the customer values. And then we're in strong progress of innovation. I think Lewis kind of mentioned in the morning, making improvements to the current products and the therapies we are focused on today and as well as expanding the portfolio like we have with laparotomy.

I'll just color on that a little bit. I mean we're not kind of hiding from this. We have lent a lot of lessons. We do think we need to get the product right. But the way that we've learned these lessons is by being out there selling the product. We've had good clinical data. We have a product that does what it needs to and some of the lessons are that's a hard sell. So we've learned the lessons by selling the product with people in the field. And I think that's part of the process. I think if you were talking to us 15 years ago, we would have thought we'd be a bit further ahead than where we are now. But I think that's part of the game.

It's Steve Wheen from Jarden. Just wanted to ask Airvo 3 and the data capability that new device you collect or intent to collect for and what are the commercial aspects of being able to utilize that data going forward?

Thanks, Steve. Yes so -- yes, there's a clear need for data to move in and out of the machine, I guess. And we'll have the ability to do that. We need to work with probably all parties on that, so the customers have lots of noise. As far as the hardware goes pretty good place to make that happen. And the rest of it, commercial agreements and things like that are still part of our development program.

Thanks for Steve. It's capable of doing anything that you want in terms of data transmission or collection WiFi, 3G -- not 3G, 5G. You name it, all the Gs, Bluetooth, even USB stick to cloud. Yes, we -- you can see we've been a little bit cagey on that because really, and you've heard all day, we don't really have a data strategy. We have how can I improve patient outcome strategy and it's not quite in place yet.

Stuart from [indiscernible]. I wondered if you could just talk in hospital land about sales force numbers and potentially how many people you'll be looking to add and the strategy across the various state, I think I'm thinking about the U.S. primarily. So can you just give us some idea about the people who are deployed now and drilling down a level in terms of SG&A, I guess, to how many people you're looking to employ and how that changes Airvo 3?

Yes. So these numbers will be off the top of my head. So let's just go with round things. I would say prepandemic into 2020 with something like 1,100 people in the sales operations. I think it's somewhere around 1,400 odd people now, something like that. And as we've talked, planning on growing that strongly through FY '23 as well. Regionally at a rough cut, we've done this for the whole duration of the business, the people go where the revenue will support them. It's actually been the kind of the default strategy for us forever. So the strategy of putting people where the hospital hardware is go is actually just kind of business as usual for us. I suppose as a rough take regionally from what you can see of the regions. That's proportionally where our salespeople are. We've got a couple of trends going on. One is building out a surgical sales force. To be fair, we've kind of sat on that for a couple of years while we get the product to where we want it to be. And then the other strategy that's kicking in there with salespeople is in the anesthesia space, I suppose, about 5 or 6 years ago, we piloted a specialist sales force selling anesthesia. And we're now pretty confident that's a good idea that gets much better results. So we are increasing that sales force at a much higher rate than any of the other parts of the sales team.

We have a question from online from Shane at Morningstar. With the scenario analysis for hospital consumables yesterday, was that factoring in the new anesthesia interfaces to help look utilization above the 60% to 70%?

That is a very good question. And [indiscernible] effective not been really not available in the period we're comparing it to.

Andrew Goodsall, bit of follow-on from that side. The trace and switch have addressed issues you've identified in the application of Optiflow, are there any other issues that you're aware of that you may look to innovate maybe to looking past the trace switch now, but any other issues that you see could increase the penetration of the Optiflow and work towards that 85% utilization rate?

I don't know if everyone behind me here is doing, but I guess we're all smiling would be my guess because Andrew alluded to it. In terms of things we'd like to do, improvements, we'd like to make opportunities we can see that list is longer than probably everybody has lifespan. And the challenge for us is choosing the [indiscernible] Yes.

Just in terms of like, I guess, on the call, and it's sort of actual -- you spoke about the 10 years of hardware placement in 2 years. Like if we fast-forward out any of Airvo 3s in operation through the states and a general kind of more general application surgical consumer will start to get some traction and drive, I guess, a hardware. So are those the 2 main components that you would sort of see filling in over the top of what we would -- as most kind of think of as a post COVID world?

I think when they're referring to a post-COVID world, my take would be that FY '23, maybe FY '24, that would be my interpretation. I might be wrong. Over a multiyear time frame, we don't really think of it like that. In FY -- and so if you want to jump just to FY '23, I wouldn't expect to see anything material in surgical to that impact.

Concept in terms of helping us thinking about future hardware sales, does surgical drive hardware sales, does the Airvo 3, AIRVO 2?

In the long term yes, yes, absolutely. Absolutely. Beyond COVID, absolutely, surgery and anesthesia, yes. That's kind of a business model for all of the hospital business. We place some hardware in normal times, the customer uses that it generates consumables. And surgical is no different, anesthesia is no different.

It's Andrew Goodsall from MST. Just interested in your views on what the hospital environment looks like after COVID in terms of trading, obviously, they're willing to see people again, but just their finances and so on in terms of taking up new products.

I don't know if I can comment on that from a factual or experiential basis, to be honest. But the backdrop is that almost everything we do, we will have a way of demonstrating that saves the system cost. From time to time, historically, when there's been extreme cost pressures on hospitals and hospital systems that actually work for us when they're coming to us and saying, how can I save some money.

It's [indiscernible] from [indiscernible]. Just given the acceleration in high flow therapy, would just be interested in broad-based comments you can make on the competitive environment today versus maybe what it was pre-COVID for high-flow therapy?

I'm really sorry, I missed the beginning of that. So I just want to find where you were.

Just given the pull forward in high flow demand over the last couple of years. I'd just be interested in comments you can make on the competitive environment today versus maybe what it was 2, 3 years ago?

Sure. So throughout the journey, we see competitors enter. We saw more competitors enter over the last 2 years during COVID. I think fair to say all the competitors over the last 2 years would have been out of China for coming. You've got to imagine we're in a much better position to convert the installed base to being used than any of those competitors. That would be our take on it. I mean you do see about that -- so you can see there's a step forward in technology there as well.

It's Craig here from ANZ. Just sort of picking up on the comment you made before about the question around the cost payment piece to sort of understand what role the bank caters or the folks writing the ticks in that sales process? I mean, is that -- if you can get the surgeon or the enthesis convinced because it doesn't feel like there's a lot of CapEx or extra expenditure required for some of the products we're seeing today, but there's a huge potential cost savings. So it should actually -- they don't feel like they are a major stumbling or hurdle to get over in the sales process?

Yes. I actually don't know your industry that well, but I imagine the answer to the question is like asking, well, who in a managed fund makes the decision on a final decision on what stock it by ourself, I imagine it's a lot of variation across the room here. Am imagining that about right? I hope so. Because there's all the variation that it is hospital to hospital, system to system. It's all over the place. It's a little bit personal procurement on the site, I'll say that, I can clinical benefit is lot more than that, sometimes a strong position. We'll do whatever doctor, whatever wants, sometimes have committees, sometimes these groups of hospitals have been together and have a clinical practice committee. It's all over the place. Every variation you can imagine. But one thing that's constant is sooner or later you go through procurement. And sooner or later, you go through a clinical sign off, whether that's an individual signing I'm okay with it or a committee or something. Those are 2 steps that everybody has a common. Sometimes I work with on where it was the central sterilizing department that seem to have to say you to any purchase or change in practice.

Just on myAIRVO, Lewis, sort of identified in your talk, there is one of the future pillars of growth. Just interested in what you think that product, if you like, needs to really accelerate in terms of adoption? Is it a bigger sales force is it more clinical data? I mean the Airvo 3 this morning, pretty impressive from auto titration would that be solving a problem potentially for respiratory support in the home?

There's probably technology in Airvo 3 that will translate through to the home, and that's for sure. I guess I'm not given much a way to say that our future. Pre-pandemic, we would have said clinical data. We would like more clinical data, prepandemic, where you were capturing either early adopters to prescribe myAIRVO in the home or we were capturing people that used it throughout the hospital, especially in a general ward, they're likely to prescribe at home. That's the prepandemic experience. So probably not much has changed post-pandemic other than we'll probably have more awards using AIRVO. So hopefully, that will pull some through, bring forward some myAIRVO work. But need and want for the clinical data, I think, actually hasn't changed in the home environment. And if anything, we may be lost 2 years because studies we did have going on in that home environment kind of came to a bit of a standstill during the COVID era. So we're kind of finding a real sense of urgency there. And as you know, some of these clinical studies take years.

And just maybe one more for me. Andrew, you had a good presentation this morning on R&D process. It's really interesting. If we sort of look forward, Lyndal was identifying a couple more sites, maybe one more in New Zealand, one more overseas, we'll find out where that is. Just interested if you feel you can continue to expand R&D focused in New Zealand or Auckland or whether you do need to start to go further afield for R&D talent to have campus overseas to set that might evolve over the next 5 to 10 years.

Yes. So that's a really good question. It was one of my concerns, I guess, that where we were going to go next, when we go beyond this site. We feel like with the growth rates that we've got, New Zealand can support us for a long time into the future for of a number of grades that are coming out of engineers and that sort of thing. We feel like we've got enough talent to fill that R&D pipeline for a long time into the future.

Probably we've demonstrated that we're able to bring talent to New Zealand.

Yes. Yes. That's absolutely right. And that's not going to change either.

About over a decade ago, that was a real problem for us, trying to get people to move to New Zealand. But in our tiny little niche sort of global industry, we're a recognized name globally and people will move to New Zealand because they want to work for Fisher & Paykel Healthcare, that's been a recent last 10 years kind of phenomena rather than just move to New Zealand for fly fishing and stuff, whatever.

Come for the fly fishing and [indiscernible]

[indiscernible] Maybe a question for Lyndal, just on cost inflation. We've heard a lot about freight costs being high sustainably. But I was just wondering about some of the other costs of raw materials like resin or plastics that go into the consumables or the chambers? Are you seeing impacts of rising costs from those elements? And also with the integrated battery in the new devices, we heard about the price of raw materials like lithium going up. Will that also impact those prices going forward?

Yes. We definitely are seeing some pricing pressures coming through our materials. We've got dedicated teams who are focused on negotiation -- negotiating with our suppliers and minimizing that as much as possible. From what we're seeing to date, there's probably an annualized about 50 basis points cost increase coming down the track, obviously, with the inventory levels that we have that might all flow into FY '23. But yes, we're certainly seeing that as all industries are.

We have a question from online from John Deakin-Bell. The question is, why won't gross margins increase from here? As you continue to grow sales, why is it not leverage?

I think I made it some -- well, obviously, I didn't make it clear. We do anticipate our margins to grow over time, not putting a timeline on that. So FY '23, we -- if we experience the same sort of freight impacts that we do this year or that we currently have, we'd expect our constant currency margin to remain flattish. In terms of sales, I think Lewis mentioned on the call yesterday, we can't see why we would necessarily without additional COVID surges to the same level of hardware sales in '23 as '22. But certainly, over time, we'll continue to do more manufacturing in Mexico, which gives us a bit of a cost advantage. We are working through regular price increases with customers. We are managing the cost increases and inflation increases with that as well. So we actually think keeping flattish of all things, the same next year as a good sort of first start, and we do anticipate growing that over time.

And I just want to add a comment to the sort of general economic model. And that for us at this size and for quite a while in our history, we don't realize an economy of scale when we double our output, we double the number of buildings, we double our support, we double the overhead. So we don't think like that, and we don't expect that. It hasn't really been the history. And then the other thing I would add that we've got up our sleeve is manufacturing in Mexico is cheaper than New Zealand. We've still got that sleeve. Mexico is a relatively small proportion of our output at present, smaller than we planned because we put a lot of that capacity increase into New Zealand due to COVID and due to the urgency and that's where the 500 engineers were. So I think we've got time for maybe one more question.

Yes. [indiscernible] from [indiscernible]. Just a very related question on pricing strategy. And I guess a lot of innovative companies like yourself, talk very much about pricing for value rather than cost. But whenever we ask you about gross margins, it's always 65%. So it almost feels like you have a cost-plus model. So I'm just curious why not some of your products have 95%, some of these surgical plastic [indiscernible] seems to make a massive difference in cost a few bucks to put together, so.

I mean, you're right. The 65% is self-imposed. I wouldn't really call it cost plus. And when we think about 65%, we're thinking about that over the long term and sustainable. That's against all scenarios and currency scenarios and cost scenarios, which means that at times we will overshoot the 65% when exchange rates are more favorable and things. At times, we won't be a bit under the 65%, which has 65% as a target on the basis of looking back at other medical device companies what can you sustain over a very long period of time, sustaining certainly, can go over 65%, but can you sustain it for long time for us, 20 years, 30 years, 40 years. Can you sustain it for that long period of time. And then so what plays in there is where you do have the ability, shall we say, to go yes, this is the price I'm charging because you've got no choice, but if we do have that, we exercise a bit of self-control because I guess the flip side is you make that business much, much more attractive to other people as well. Keeping a balance between an attractive business, a sustainable business and attracting competitors into it. So I think we're at time. I appreciate the questions. Thanks for your interest. But I'm going to hand over to the team here. Thanks very much, guys.

That concludes the formal part of today. We'd like to thank everyone for attending in person. It's fantastic. I'd be able to have these events again. And yes, it's been a pleasure hosting you. Any comments?

Yes. No, I hope you had [indiscernible] I hope it was exciting who you explore all our new products and had a good site to ordinate all the food, of course, the interest of [indiscernible] Healthcare Innovation, we will be sending out a survey, it was a brief survey. Don't worry for you to complete just so that we can keep posting fun events like this in the future.

Yes. Thanks again to our online audience as well. I hope you guys enjoyed it at home. Now tip for young players. We have a shift finishing in about 15, 20 minutes. So there'll be about 1,000 cars to see you hybrid drive. We highly recommend you get ahead of that. But thanks so much for attending today, and enjoy the rest of your day. Yes. Thank you.

Have a good day.